Action needed to ensure long-overdue rise in living standards, says think tank
The Resolution Foundation said typical family incomes have grown by just £140 a year since 2010.
Britain’s “great living standards slowdown” has left typical family incomes growing by £140 a year since 2010, according to a think tank.
Economic shocks and sluggish growth have resulted in typical real non-pensioner household disposable incomes growing by 0.5% a year, or £140 annually on average, in the 14 years since 2009-10, the Resolution Foundation said.
Incomes have grown by 7% over the 14-year period, while income growth over the 14 years prior to 2009-10 stood at 38%, according to the research.
Three economic shocks in a little over a decade – the financial crisis, Covid-19 and double-digit inflation, with little catch-up growth in between, have resulted in disposable income growth slowing to a crawl, researchers said.
The Hard Times research, funded by the Nuffield Foundation, combines Department for Work and Pensions figures with data on jobs, pay and housing costs.
Between 2009-10 and 2023-24, the poorest fifth of households saw their incomes grow by 13% – higher than the 7% increase for typical households, the Foundation found.
This is partly explained by cost-of-living payments last year, as well as the UK’s strong employment performance, it said.
However, the Foundation also highlighted the “regressive impact” of tax and benefit policy decisions taken since 2010, which it said had reduced the incomes of the poorest fifth of households.
The Foundation, which is focused on improving the living standards for those on low to middle incomes, said restarting the level of income growth families enjoyed before the financial crisis is a test by which the next Parliament should be judged.
Lalitha Try, an economist at the Resolution Foundation, said: “Britain is finally emerging from the cost-of-living crisis.
“But the bigger backdrop is a living standards slowdown that has left typical household incomes growing by just £140 a year since 2010.
“While global economic shocks have been a major factor, Britain’s recent record is poor compared to both its own history and many of our European neighbours.
“What little income growth Britain has experienced over the past 14 years has been driven primarily by rising employment, which has benefited poorer households the most.
“Britain will need to reverse its dire record on productivity growth, and repeat its 2010s success on jobs growth, if the country is to enjoy a long-overdue return to rising living standards over the next Parliament.”
