Living standards for young families fall

The rich have been thriving while the other 99% of UK households had found it more difficult to make ends meet.Young families were particularly hard hit by an "abrupt" slowdown in living standards in the year before the general election, a think tank says.

The Resolution Foundation found that average income growth halved to 0.7% during that period compared with the previous year. Over the year, incomes among low to middle-income families grew by 0.4%, compared with 1% for those in the top half of the income distribution. Two out of five of this group said they were not able to save £10 per month, while 42% cannot afford a holiday at least one week per year.

Those aged 25-34 were worst hit, it said, with their average incomes no higher than they were in 2002-03. Young families were the only group whose incomes have failed to return to pre-financial crisis levels. 

"The typical 25 to 34-year-old appears no better off today than in 2002-03," the report said.

The fall in average income growth followed a "mini-boom" between 2013 and 2015, the foundation said, when living standards improved.

Families in rented accommodation have experienced little or no income growth.

The think tank's senior economic analyst, Adam Corlett, said: "For millions of young and lower-income families the slowdown over the last year has come off the back of a tough decade for living standards, providing a bleak economic backdrop to the shock election result. Over the last 15 years and four prime ministers, Britain has failed to deliver decent living standards growth for young families and those on low incomes. Rising housing costs have added further financial pressures."

The top 1% of households with incomes of £275,000 had a "rapid recovery" in incomes, the report said, and now have an 8.7% share of the nation's income. The think tank said the fortunes of the top 1% had been the driving force of rising inequality since the mid-1990s.