While the Conservative Party is crowing about GDP and the fact the UK has technically come out of a recession, buried in the figures was some news they probably didn’t want you to hear: your disposable income has actually fallen since 2019. In fact, it has been the worst period for income growth since at least the 1950s.
The UK: out of recession… technically…
Britain’s economy emerged from a short-lived recession in the first quarter with stronger-than-anticipated growth, upwardly revised data showed Friday, lifting embattled Prime Minister Rishi Sunak before next week’s general election.
GDP grew 0.7% in the first three months of this year, the Office for National Statistics (ONS) said, upgrading the prior growth estimate of 0.6%. Market expectations had been for no change.
The surprise modest improvement was driven by the services sector, with slightly stronger activity in the professional services, transport and storage.
However, the ONS had revealed earlier this month that the UK economy had stagnated in April with zero growth, but the performance was hit by wet weather.
The economy contracted slightly for two quarters in a row in the second half of 2023, meeting the technical definition of a recession that was caused by elevated inflation that has prolonged a cost-of-living crisis.
But behind these figures was bad news for the rest of us.
Tories: presiding over a fall in your disposable income
Analysis by think tank the Resolution Foundation has found that household disposable income is dire.
It noted that:
Real household disposable income (RHDI) was one per cent lower in Q4 2023 (the latest data at the time of the last General Election) than it was in Q4 2019. Although there is still more data to be released before we can conclusively assess progress up to the 2024 election, it is likely that the 2019-2024 Parliament will have been the worst for income growth since at least the 1950s.
Moreover, it also found that:
Taking a longer view, typical non-pensioner incomes have grown since 2009-10, by £1,900, or 7 per cent. But again, this level of income growth – equivalent to an average annual real-terms change of 0.5 per cent, or £140 a year – is unusually low by historical standards.
And had we experienced the same level of growth in median incomes between 2007 and 2022 as the Netherlands, France and Germany, the UK’s median income in 2022-23 would be £2,700 higher than actually observed.
The worst five years in modern history
TUC general secretary Paul Nowak said:
This parliament will go down as the worst for living standards in modern history – with households worse off than at the start.
The Conservatives can try and blame external events. But 14 years of Tory stagnation have been toxic for family budgets.
The reason so many people have struggled during this cost of living crisis is because real wages are still worth less than in 2008.
We can’t go on like this. We need a government that will make work pay.
TUC analysis shows:
- If real wages had grown at their pre-crisis tend workers would be, on average, £14,000 a year better off.
- Unsecured household debt is set to increase by over £1,600 this year.
Additional reporting via Agence France-Presse
Featured image via the Canary
