'Just about managing' families face three year income freeze, says thinktank
Low and middle income families are set to face income stagnation until 2020, a major thinktank has said.
Those in the 'just about managing’ bracket, as they are called by Theresa May, are set to miss out on any growth in the coming years, with an expected income rise of just £300 - or 2% - over the decade to 2020.
Those on higher incomes however are expected to see a £3,100 average rise over the same period – or 10%.
The Resolution Foundation says major cuts to working age benefits lie behind the bleak outlook, with levels of income inequality projected to reach record highs by the beginning of next decade.
They say the current projections show there could be the "first sustained rise in inequality since the late 1980s", despite it having fallen in the immediate aftermath of the financial crisis.
The organisation adds that high inflation means typical household incomes are projected to fall marginally this financial year- making it the worst for income growth since 2011-12, and the third worst in the last 25 years.
They say however that with inflationary pressures easing and some signs of pay growth, family incomes generally are set to start slowly rising again next year.
Yet they add that the pace of growth could be “sluggish”, peaking at just over 1% per year by the end of the parliament – compared to the 2.1% average rate of income growth households saw before the financial crisis.
Director of the Resolution Foundation, Torsten Bell, said the latest forecast was “less about the rich soaring further away, and more about poorer families falling further behind”.
“Lots of factors lie behind projections of a parliament of weak income growth, many of which are beyond the government’s immediate control,” he said.
“But it is policy decisions, not capitalism, that look set to drive living standards of low and middle income families down and inequality up in the years ahead.
“Recent years of economic anxiety and political division should have taught us that this is the last thing Britain needs.”
Senior Economist Analyst at the Resolution Foundation, Adam Corlett, said while 2017 was a “disastrous year for living standards” it remains “really worrying news” that low and middle income households are not expected to see much of an improvement.