Commenting on the DWP’s Households Below Average Income statistics published today (Thursday) – the biggest and most authoritative official survey of household incomes – Adam Corlett, Economic Analyst at the Resolution Foundation, said:
“The big picture for living standards has been a sharp squeeze and stagnation in the wake of the financial crisis, followed by a short lived mini-boom in the years immediately before the EU referendum that is confirmed in today’s income figures.
“While inequality fell sharply in the immediate aftermath of the crisis, driven by sharp pay falls for richer households, the picture since then has been broadly flat with a small increase last year on some measures.
“The detailed living standards story depending very much on where you live. Households in Yorkshire and the Humber have enjoyed the strongest income gains, while typical incomes in London are actually lower than they were on the eve of the financial crisis, once housing costs are taken into account.
“It is the outlook for living standards, rather than the past, that is particularly concerning for low and middle income households. The mini-boom shown in today’s figures has already come to an end with inflation rising and employment growth slowing.
“Looking to the future, with over £12bn of welfare due to be rolled out over the course of the parliament, the risk is that sluggish income growth is combined with the first major increase in inequality since Margaret Thatcher was in Downing Street.”