We are losing a pound a day. A time for rejoicing, you might think, only we are not losing it in weight. In the last three years, average household incomes have reduced dramatically by £360 per year, the worst three year period since the Thatcher years and the times of the miners strikes, a reduction of nearly two percent. This figure is adjusted for inflation and is as a result of wages not increasing, high inflation and interest rates.
This figure is even more revealing when we look at the overall picture for the last fifty years, which shows that overall incomes have risen by the same rate that they have fallen in the last three years. The poorest households have fared even more badly. Those in the ten percent worst-off households have seen their average figure fall by over two percent, which equates to a drop of nearly £550 over the three years.
The poor can take comfort in the fact that the rich have fared even more badly, for once, therefore, on a positive note, we could say that the gap between rich and poor has got narrower. Those households in the highest five percent have seen their incomes fall by over £2,200, a drop of nearly four percent. Those with children fell by just over one percent, when they would normally have expected to see an average increase of over £1,000.
The news makes grim reading ahead of the budget this Wednesday, where the Government is expected to stick with their guns of reducing the budget deficit by £111 million. Think tank, the Institute of Fiscal Studies (IFS check), prepared the report for the BBC. Paul Johnson of the IFS thinks that it will be two years before we see incomes rise again, in which case, incomes will not have risen year-on-year for five years, the worst position in forty years.
Inflation is not expected to change from four percent, in contrast to wages. The average salary, in the January to March period, was just over two percent higher than a year ago, and most of this was as a result of bankers’ bonuses, which masks the true figure. Only eleven percent of people said that they had seen a rise, according to Uswitch. The average interest on savings is less than one percent, compared to over four percent in 2007. Pensioners income has fell by over two percent.