Young people hit by 'abrupt' slowdown in living standards as income fails to rise

 
Courtney Goldsmith
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Young families were the among the worst hit by a slowdown in incomes (Source: Getty)

Young people in the UK were hit by an "abrupt" slowdown in living standards in the recent months before the General Election, a think tank said.

Growth in typical incomes has halved from 2015-16 to 0.7 per cent this year, the Resolution Foundation found in a report on living standards in the year leading up to the 2017 General Election and over the past two decades.

Income for those aged 25-34 was worst hit, rising no higher than it was in 2002-03.

"Typical household incomes for 25 to 34 year-olds have performed especially poorly post-crisis," the report said.

"In comparison, typical incomes for all other age groups are now above, or very near, their pre-recession peaks."

Read more: Capitalism must work for the many, not the few


(Source: The Resolution Foundation)

The Resolution Foundation noted that inequality has been rising slowly over recent years. The report found the top one per cent's total share of income is now nearing a record high of 8.7 per cent following a "rapid recovery" from the recession.

Low and middle income families, meanwhile, still had average incomes after housing costs that were lower than in 2003-04.

"Despite the welcome political focus on such ‘just managing families’, we estimate that income growth for this group in 2016-17, ahead of the election, was lower than for higher income groups."

The report also found the UK's economic performance since the Brexit vote has been mixed. Employment levels that continue to outperform expectations have had to compete with a combination of higher inflation, lower pay rises and frozen benefits has.

The vote to leave the European Union was only a year ago, and the moment of Brexit itself is of course still some time away, so it is too soon to judge any long-term impact on living standards.

However, it is clear that rising inflation – driven in no small part by a large fall in the value of sterling following the vote – has cut into the real value of people’s earnings and benefits over the course of that year.

The Resolutoin Foundation said looking to the future raises a "gloomier prospect still", but that the outcomes it notes are "far from inevitable".

"More generally, the government must ensure a strong economy overall, with a careful Brexit policy and productivity growth across the country and across sectors: easier said than done, of course."

Read more: Stagnant productivity is the greatest threat to UK living standards, stupid

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