Despite an increase in the average UK disposable income, the quality of life is on the way down for most individuals. A rising cost of living and increasingly lower wages in real terms have disguised the claims of growing wages and employment that have been used in describing Britain’s economic recovery.
Chancellor George Osborne’s recent comments in The Times that disposable income is on the rise have sparked a lot of discussion in economic circles, with professional economists and commentators alike expressing their concern that rising income has not kept up with the increasingly expensive cost of British life.
The increase in disposable income can be linked to the Office for National Statistics report, which used the total amount of household income as the basis of its claim of growing disposable income. The average household income, however, doesn’t quite reflect the reality depicted in the report.
The Institute for Financial Studies has reported a very different picture to the one put forward by the Office for National Statistics. It claims that living standards are on the way down – by three percent annually, to be exact – and that the average British household has less spending power today than it did prior to the crisis.
As the two studies achieved very different results, it’s possible that median income is on the decline even with total income on the way up. When the average income is calculated using GDP per capita – long the standard for this figure – it becomes clear that the country’s households are worse off than before the credit crunch.
The declining living standards are easy to spot, and difficult to disguise. They’re also evidence that despite major investments in economic growth and improved incomes for many in Britain, the true effects of the financial crisis are long from over.
