It is estimated that people who are not earning large salaries won’t see the amount of disposable income they have increase to the levels seen before the recession for another eight years. This figure has recently been released by the think tank, the Resolution Foundation.
The study was titled ‘Squeezed Britain’ and it applies to households that bring in about £20,000 each year. In addition to the problem with disposable income it is also estimated that these people will have to wait over 20 years until they have enough money to purchase their first house.
It is estimated that nearly six million households in the country fall into the group that the study applies to. It is expected for people in this income category that their incomes are going to decline over the next few years until they level out around 2017. It is expected that after this period incomes will grow strongly but even with very strong growth it will take another three years for salaries to be at the pre-recession level.
If these growth figures are not met then it is possible that the wait will be even longer and that by 2020 income levels will still be nearly 10 percent lower than they were in 2007.
The study also highlighted the problem of getting on the property ladder and compared the amount of time people had to save in order to afford a deposit on the first time. In 1991 it was estimated people had to wait four years, by 2001 this figure had doubled to 8 years and last year it was estimated that people are having to wait is 22 years before they can afford the deposit money. This is because of the rising price of homes while incomes have remained relatively flat in comparison.