Household incomes are set to start rising again in 2015 after six years of decline according to the Resolution Foundation. The findings come in a detailed and authoritative assessment of the state of Britain’s living standards.
However, the report from the independent think tank also finds that growth in disposable income for the typical household is likely to be modest, barely positive in 2015-16 and less than one per cent a year for each of the following three years. As a result, despite improving, typical living standards will still be 3.5 per cent lower in 2018-19 than they were before the financial crisis of 2008, only just inching above the level they were last at in 2005-06.
- It is clear that 2014 will be a critical year for living standards, telling us much about how the link between economic growth and personal gain is evolving. For the ﬁrst time in ﬁve years, it now seems that the growth side of this equation has made a decisive shift. A solid recovery in GDP is underway. On the other side, it seems likely that living standards – on average – have now stopped falling.
- Our projections suggest they will probably ﬂat-line before starting to climb slowly again in 2015. It will be much longer before households make up the ground that has been lost. The consequences of this permanent change to the path of living standards will be felt economically, politically and socially for many years to come.