Real per capita household disposable incomes were lower in early 2024 than they were back in late 2019, with growth so far in this parliament weaker than all but two parliaments since 1910, the Think Tank, the Resolution Foundation said today in response to the latest ONS National Accounts data.
The report notes that real per capita household disposable incomes (RHDI) has grown over the past year, by 2.4 per cent, as Britain has emerged from the depths of the cost-of-living crisis.
However, Britain’s record over the parliament as a whole remains very weak. Between Q4 2019 and Q1 2024, RHDI has fallen by 0.6 per cent, or 0.1 per cent a year on average, leaving average incomes £120 a year lower per person over the whole period since the last election.
Resolution Foundation analysis of ONS and Bank of England data shows that the current parliament has been historically weak for living standards.
If future data confirms that incomes are lower at the time of the upcoming election than in late 2019, that drop would be the first such fall since the 1950-51 parliament, and only the third since 1910.
The 1918-1922 parliament, when Britain was gripped by the Spanish Flu, saw RHDI per capita fall by an estimated 8 per cent, while the short 1950-1951 parliament, when inflation spiked as a result of rapid rearmament for the Korean War, saw RHDI per capita fall by roughly 1 per cent.
The Foundation notes that external shocks have driven down incomes over the current parliament, with Covid-19 and the cost-of-living crisis affecting the living standards of millions of families across many economies.
However, Resolution Foundation research published today also shows that Britain’s great living standards slowdown predates the pandemic and goes all the way back to the financial crisis. Since 2010, typical real non-pensioner household disposable incomes have grown by just 0.5 per cent a year on average.
Adam Corlett, Principal Economist at the Resolution Foundation, said:
“The last five years have been terrible for living standards growth. Disposable incomes in early 2024 were still lower than they were at the 2019 election, by around £120 per person. Income growth over the parliament so far has been worse than in any other since the 1950s, and the third worst in post-Edwardian Britain.
“Britain is far from alone in experiencing a tough five years – many other countries have been badly affected by Covid-19 and the cost-of-living crisis straight after that. But Britain’s longer-term record on growth is also weak and we remain poorer than many of our peers. Addressing this great living standards slowdown is the ultimate test for whomever wins the election.”
