A report found that 15 years of stagnant incomes have left families “brutally exposed” to the cost of living crisis.
In the 15 years preceding the pandemic, the average income of families with working-age members increased by only 0.7% per year. This is considerably slower than in preceding decades.
According to the Resolution Foundation, this year many families have been unable to accumulate the savings necessary to deal with rising prices.
In the 15 years preceding the COVID pandemic, the average income of families with working-age members grew at a rate of only 0.7% per year, considerably slower than in previous decades.
From 1961 to 2005, the average household income increased by 2.3% per year, or by 25% per decade.
The analysis found that more than one in four families have less than a month’s worth of savings and face a weak social safety net, with basic unemployment support now at its lowest level on record at 13 percent of average pay.
The average incomes of the poorest fifth of the population did not increase between 2005 and 2020, despite a 12 percent increase in per capita GDP.
A poor record of living standards in recent years
The report found that those living in rented housing and those with young children were hardest hit by low incomes.
On the eve of the pandemic, the average household income of families living in social housing was 37% below the national average, while it was 24% lower for those renting privately.
The figures were 35% and 20% lower for single parents and parents of children under 5 years old, respectively.
Adam Corlett, the chief economist at the Resolution Foundation, stated, “Households across the United Kingdom – and in many other nations – are currently coping with unprecedented levels of inflation.
“However, even though many of the current crisis’s causes are global in nature, it is Britain’s recent history of low-income growth and high inequality that has left so many households struggling to make ends meet.
“Britain’s poor recent record on living standards – particularly the complete collapse of income growth for poor households over the past two decades – must be reversed over the next decade.
To achieve this, we must address our failure to increase pay and productivity, strengthen our social safety net, reduce housing costs, and build on our successes, such as increasing employment for low-income households.
Inflation reached 9.1 percent in the year leading up to May in the United Kingdom, the highest level in forty years.
Autumn inflation is expected to reach 11 percent, according to the Bank of England.
