The Covid-19 crisis is on track to cut average pay packets by £1,200 a year by 2025, according to new analysis from the Resolution Foundation.
The economic downturn will continue to squeeze living standards in Britain warned the foundation. Its new research says that "the combined effects of weaker pay growth and higher unemployment will serve to prolong Britain's living standards squeeze".
"The Covid crisis is causing immense damage to the public finances, and permanent damage to family finances too, with pay packets on track to be £1,200 a year lower than pre-pandemic expectations," warned Torsten Bell, chief executive of the Resolution Foundation. "The pandemic is just the latest of three 'once in a lifetime' economic shocks the UK experienced in a little over a decade, following the financial crisis and Brexit," he added. "The result is an unprecedented 15-year living standards squeeze."
Its analysis shows household incomes have been growing at a slower pace even before the pandemic. They are on course to grow just 10% during the 15 years from the start of the 2008 global financial crisis until 2023. But household incomes grew by a much higher 40% in the 15 years leading up to the financial crisis. Further pressure will come next April, when about six million households will lose more than £1,000 through reduced Universal Credit payments.