UK households' incomes squeezed to 1990s recession levels
By Caoimhe Toman
Date: Wednesday 17 Jul 2019
(Sharecast News) - Households in the UK have seen their incomes squeezed more in recent years than during the 1990s recession, reported the Resolution Foundation on Wednesday.
Over the past two years, UK households's income growth had fallen to a pace not seen since the early 1990's recession, hitting its slowest pace outside of an economic contraction since the records began in 1961.
The Living Standards Audit 2019 from the Resolution Foundation analysed the state of living standards across the country and found that the next Prime Minister will have the tricky challenge of restoring household income growth.
It estimated that typical household incomes fell by 0.5% over the prceding two years (between 2016-17 and 2018-19) - even weaker than the 0.3% growth seen between 1991 and 1993 when the country went through a recession and subsequent recovery.
Hammering income growth was the absence since the onset of the financial crisis of the traditional driver of income growth - rising productivity.
Looking at the economy as a whole, the audit found that population growth has accounted for over-two thirds (69%) of overall economic growth since 2007, compared to just 15% pre-crisis, leading households to boosted their incomes by working more and cutting down on leisure time.
The Foundation suggested the new PM should make higher living standards a priority and attempt to boost earnings via raising productivity and highlighted that rising employment and earnings for women had been a key driver of improving living standards.
He should also invest further in skills and capital across the UK, as well as resolving Brexit uncertainty.
Adam Corlett, senior economic analyst at the Resolution Foundation, said: "The living standards history of the past 25 years tells us that there are two ways broad ways that families have traditionally got richer over time - higher pay off the back of rising productivity, and supporting more women into work.
"After an unprecedented income squeeze over the past decade, and a living standards outlook that includes child poverty rising to record levels, an economic approach that supports higher incomes for all households must be the top domestic priority for the incoming PM."
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