Average UK living standards have fallen "dramatically" since the recession. The Institute for Fiscal Studies (IFS) calculated that a mid-range household's income in 2013-14 was 6% below its pre-crisis peak.
This was felt equally across high and low income groups when the cost of living was taken into account. But those on low incomes could feel the squeeze more in the coming years. This was the result of further cuts to benefits and tax credits, the IFS said. It added that earnings might pick-up faster than benefits and tax credits, which meant the poorest might be squeezed harder than others.
Rising food and energy prices, which formed a bigger proportion of the spending of poorer households, had risen faster than the average cost of living measured by inflation. The report said that inflation between 2008 and 2013 was 20%, while energy prices rose by 60% and food prices were up by 30% over the same period.
"Looking forward, there is little reason to expect a strong recovery in living standards over the next few years," the report said.
The Office for National Statistics (ONS) said that UK real wage growth was the strongest in the G7 group of countries before the financial crisis. However, post-downturn, the UK has experienced the largest fall in real wage growth among this group of countries - the UK, the US, Japan, Italy, Germany, France and Canada.
This was felt equally across high and low income groups when the cost of living was taken into account. But those on low incomes could feel the squeeze more in the coming years. This was the result of further cuts to benefits and tax credits, the IFS said. It added that earnings might pick-up faster than benefits and tax credits, which meant the poorest might be squeezed harder than others.
Rising food and energy prices, which formed a bigger proportion of the spending of poorer households, had risen faster than the average cost of living measured by inflation. The report said that inflation between 2008 and 2013 was 20%, while energy prices rose by 60% and food prices were up by 30% over the same period.
"Looking forward, there is little reason to expect a strong recovery in living standards over the next few years," the report said.
The Office for National Statistics (ONS) said that UK real wage growth was the strongest in the G7 group of countries before the financial crisis. However, post-downturn, the UK has experienced the largest fall in real wage growth among this group of countries - the UK, the US, Japan, Italy, Germany, France and Canada.
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