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- author, Falea Massoud and Lucy Hooker
- role, Business Reporter, BBC News
According to the think tank’s report, slowing economic growth and three major economic shocks have led to very slow growth in household disposable income since 2010.
New analysis from the Resolution Foundation shows that the typical household income is rising by just £140 a year.
This means that the amount of money people have left to spend after paying taxes has increased by a total of just 7% over 14 years, or an average of 0.5% per year.
By contrast, disposable income grew 38 percent in the 14 years to 2010, the poverty-focused think tank wrote.
However, poorer households saw faster income growth than wealthier ones, the report noted.
The Resolution Foundation said the 2008 financial crisis, the coronavirus pandemic and high inflation had all contributed to the economic slowdown, but overall growth had also been “slow.”
As a result, income growth has “slowed”, hindering progress in reducing poverty levels, the report said.
The state of the economy, and particularly the pressure on ordinary families from the cost of living crisis, has been a central theme of the general election, with the Conservative Party seeking to defend the record it has achieved in power since 2010.
The think tank’s analysis found that poorer households saw the biggest increase in disposable income during this period, helped by a strong UK jobs market.
For the poorest fifth of households, the one-off living allowances given last year also contributed to a larger increase in income.
However, these gains were largely offset by the impact of what the report calls “regressive tax and benefit policy decisions”, which led to an overall 13% increase in disposable income over the period.
Meanwhile, the incomes of the richest households have grown by just 2% in 14 years, the report said.
The think tank said Eurostat data, covering a similar but not identical period from 2007 to 2022, suggested the UK was faring worse when it came to disposable income growth than several other major European countries, including the Netherlands, France and Germany.
“Global economic shocks have played a large role, but the UK’s recent performance has been poor compared with its history and many of its European neighbours,” said Larisa Try, an economist at the Resolution Foundation.
“The small income gains the UK has experienced over the past 14 years have been mainly due to employment growth, with poorer households benefiting most,” she said.
The report, titled “Hard Times”, was funded by charitable trust the Nuffield Foundation and used data from the Department for Work and Pensions combining information on jobs, wages and housing costs.
The study found that absolute poverty has fallen by 3.6 percentage points since 2010, compared with a 14 percentage point fall in the 13 years prior to 2010.
The report finds that while relative poverty levels have remained broadly stable over the past 14 years, the number of children living in large poverty-stricken families has increased and the number of children living in small poverty-stricken families has decreased.
The BBC has asked each political party to respond to the report.