UK households suffer biggest drop in income since the Seventies
Analysis shows that in less than three months the income of the average working household has dropped 4.5 per cent
During the coronavirus pandemic, UK households have suffered their sharpest drop in income since the mid-1970s when the oil-crisis triggered a huge rise in consumer prices.
Analysis of May 2020 economic data by the Resolution Foundation (RF) shows that in less than three months the income of the average working household has dropped 4.5 per cent.
The RF’s research shows that far from being a “great leveller”, the pandemic has affected households differently, with the poorest protected by government support schemes.
The analysis shows that the coronavirus has mainly hit the labour market, with big implications for the incomes of working families. Meanwhile, pensioner incomes grew 1.8 per cent in May 2020 compared with the average for the 2019-20 financial year.
Overall, the young and working households without children have seen the biggest drop in income. Households with children were eligible for more welfare assistance than their childless counterparts, with the poorest families benefiting from the government’s furlough scheme and increases to the universal credit benefit scheme.
Around £17bn was spent on the government’s job retention schemes in May, according to estimates from the Office for Budget Responsibility.
Its figures also show that welfare was boosted by £9bn for the financial year 2020-21 to support those on the lowest incomes.
Additionally, data from IHS Markit Household Finance Index, which tracks Britons’ sense of financial wellbeing, shows that fears over job security are affecting household spending, despite the gradual reopening of the economy and a return to work.
In July, nearly a third of people surveyed by IHS reported a decline in job security, while only 8 per cent said they saw an improvement.
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