Slow economic growth and three major economic shocks have meant households’ disposable incomes have grown very slowly since 2010, according to a think tank report.
Typical household incomes went up by just £140 a year, new analysis from the Resolution Foundation showed.
That is a total rise over the 14 year period of just 7% – or an average of half a percent a year – in the amount people had left over to spend after paying tax.
By contrast, disposable incomes rose 38% over the 14 years up to 2010, the poverty-focused think tank wrote.
However, poorer households had seen stronger income growth than richer ones, it said.
The Resolution Foundation said the 2008 financial crisis, the Covid pandemic and high inflation had all contributed to the slowdown, but that growth in general had also been “sluggish”.
That resulted in income rises “slowing to a crawl” it said, hampering progress in reducing poverty levels.
The state of the economy, and especially the squeeze on ordinary families through the cost of living crisis, is a central theme in the general election, with the Conservatives defending their record in government since 2010.
The think tank’s analysis found poorer households had seen the strongest growth in their disposable incomes over the period, in part thanks to the UK’s strong jobs market.
Looking at the poorest fifth of households, it said the one-off cost-of-living payments last year also contributed to bigger income gains.
But these gains were largely offset by the impact of what the report called “regressive tax and benefits policy decisions”, resulting in a 13% total overall rise in disposable incomes over the period.
The richest households meanwhile saw only 2% income growth over the 14 year period, it said.
The think tank said data from Eurostat, covering a similar but not identical period between 2007 and 2022, suggested the UK had fared worse when it came to disposable income growth than several other leading European countries, including Netherlands, France and Germany.
“While global economic shocks have been a major factor, Britain’s recent record is poor compared to both its own history and many of our European neighbours,” said Lalitha Try, an economist at the Resolution Foundation.
“What little income growth Britain has experienced over the past 14 years has been driven primarily by rising employment, which has benefited poorer households the most,” she said.
The report entitled Hard Times was funded by the Nuffield Foundation, a charitable trust, and used data from the Department of Work and Pensions combined with jobs, pay and housing cost information.
It found absolute poverty had fallen 3.6 percentage points since 2010, but in the 13 years prior to 2010 it had fallen by 14 percentage points.
Relative poverty levels remained broadly stable over the last 14 years, but the number of children in large families living in poverty had risen, while those in small families living in poverty had fallen, it said.
The BBC has asked the political parties for a response to the report.
