FAIRNESS
Bottom half of earners face income freeze until 2020
Millions of households who are in work but on low to middle incomes face a further decade of stagnating living standards, according to a new report from independent think tank, the Resolution Foundation. In fact, the report reckons that household incomes for the “squeezed middle” are unlikely to return to pre-recession levels before 2020.
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The new annual snapshot, Squeezed Britain, exposes what life is really like for Britain’s 5.8 million low to middle income households. It says: “With real wages falling 4.2% over the last year, growing inequality of pay, and tax credits propping up incomes, families remain exposed to further deep cuts to tax credits due in April this year. The report also charts a decline in the male breadwinner role, with income brought in from men falling substantially over the last decade.”
Ordinary families also facing a higher rate of inflation on their typical basket of goods that cost them an extra £427 last year compared with those on higher incomes.
The Resolution Foundation calculates that this all adds up to a gloomy picture on incomes for the next decade. It concludes: “Even if income growth returns to the strong levels seen in the late 90s and early 2000s, it will take until 2020 for low to middle income households to get back to the same level of disposable income they had before the recession. On a less optimistic scenario, low to middle incomes will remain stagnant (as they were from 2003-2008) with no real increase from now, even by 2020.”
A final word
“This latest annual snapshot of what life is really like for families on low to middle incomes shows rising pressure from pretty much all sides. Continued low interest rates and the start of a fall in inflation offer only limited respite. This will be far outweighed by further deep cuts to tax credits due this April which will come as a shock on top of the continued wage squeeze.” - Matthew Whittaker, author of report.
Want to know more?
Title: Squeezed Britain, Resolution Foundation, January 2012.
Availability: The 28-page report is available for download, free of charge in PDF format, from www.resolutionfoundation.org/publications/.
The Resolution Foundation is an independent research and policy organisation: “Our goal is to improve outcomes for people on low and modest incomes – in particular the 11 million adults in low to middle income households (LMIs), living on below median income but broadly independent of state support.”
To find out more visit www.resolutionfoundation.org.