Rich bore first brunt of UK recession pain

 
Michael Bow
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THE WEALTHIEST households in Britain were the hardest hit by the recession in the first five years after the financial crash, according to figures published today.

The top ten per cent of earners saw the biggest drop in real income between 2007 and 2012, with incomes dropping 6.3 per cent compared to a 1.2 per cent increase in income for the poorest ten per cent of households.

However, the figures, published by the Institute for Fiscal Studies, show the poorest ten per cent of households will suffer the biggest fall in real incomes between 2011 and 2016, tumbling 4.5 per cent.

The lag in the financial pain felt by households at the lowest end of the income scale was due to the benefits systems, the IFS said. But welfare cuts coming into force between now and 2015-16 will reverse this trend, it said.

Senior research economist at IFS Robert Joyce said: “Most of the falls in real incomes associated with the recession have now happened for middle and higher income groups.

“But much of the pain for lower-income groups is occurring now or is still to come, because these groups are the most affected by the ongoing cuts to benefits and tax credits.”