Millions face long road to recovery
Published 13/02/2013 | 00:27
Millions of families might not see a return to pre-recession standards of living for another decade, a think-tank has warned.
The Resolution Foundation said many low to middle income households would never fully recover the ground they lost due to the prolonged economic downturn.
Even if typical earnings for such families were to rise by 1.1% a year, the report calculated it would take until 2023 before they recovered to £22,000 a year at current prices - the equivalent of where they stood in real terms in 2008.
Without the prolonged downturn, the report estimates that typical earnings could now be expected to stand at £27,500 a year.
However to reach that level over the next decade would require real-terms growth of 3.3% a year - a figure the report described as "unattainable" based on current forecasts and past experience.
The report defines low and middle income households as being of working age and relying primarily on their own earned resources but with incomes below the median for the UK.
In practice, it means couples without children living on a joint income of between £12,000 and £30,000 or between £17,000 and £41,000 for a couple with two children.
On average this group has seen a 2.4% cut in real incomes since 2009-10, and the report calculated that it would now take 22 years for such households to save for an average deposit on a first-time buyer property.
At the same time, polling conducted by Ipsos Mori for the report found many people remained pessimistic about the outlook for the economy. More than one in three - 36% - did not believe the economy would be growing again by 2015, compared with 47% who thought it would.
Views were divided on whether people expect to be better off by 2015 than they are now - with 42% saying they thought they would against 40% who thought they would not.