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July 4, 2022 - The UK is the fifth-largest global economy, but the change in disposable income since before the financial crisis remains among the lowest in Europe, the Resolution Foundation warns.
The gross domestic product of the British economy was £2.2 trillion (€2.6 trillion, $2.7 trillion) in 2021 and trailed only behind the United States, China, Japan, and Germany.
However, in “Living Standards Audit 2022,” published Monday (July 4, 2022), the think tank said too many families face the cost of living crisis, already struggling with low incomes, scant savings and ungenerous welfare support.
The foundation blames poor productivity that has depressed pay levels and entrenched decades of inequality. It said that a typical wage would be £9,200 (€10,700, $11,000) higher today if pay continued to grow as it did before the 2008-09 financial crisis.
One of the consequences of the poor income growth in the pandemic was relatively poor financial resilience among British households.
Newly-available data covering the 24 months leading to the pandemic (2018-20) confirms this. When asked how long people thought their savings would last them if their primary income source stopped, just over one-in-four (26 per cent) of all adults would not be able to manage for a month.
“Britain’s poor recent record on living standards -- notably the complete collapse of income growth for poor households over the past 20 years -- must be turned around in the decade ahead,” said Adam Corlett, principal economist at the Resolution Foundation.
“To do that, we must address our failure to raise pay and productivity levels, strengthen our social safety net, reduce housing costs and build on what we’ve done well –- such as boosting employment for lower-income households,” Corlett said.