IFS predicts years of falling incomes following Autumn Statement
The Institute for Fiscal Studies says that household income levels will be no higher in 2016 than they were in 2002.
The Institute for Fiscal Studies (IFS) has said that we’re heading towards a bleak period of falling disposable income.
The thinktank says that ‘real median household incomes’ will have fallen by 7.4% over the four years to 2012. More alarmingly, it claims that real household incomes will be no higher in 2015-16 than they were back in 2002-03. And it says that will mean “more than a decade without any increase in living standards for those in the middle of the income distribution”.
It's forecast just a 0.1% growth in household incomes in 2013, rising to 1.2% in 2014 and 1.7% in 2015. However, those numbers follow a drop of 3% this year and 1.1% next year.
It’s the biggest fall in household income since the mid-1970s. The IFS attributes this to “slow recovery” following the recession.
“One begins to run out of superlatives for describing quite how unprecedented that is,” it said in response to its findings.
The IFS says families with children will be hardest hit by this fall in disposable income while the average pensioner will see their income rise modestly.
It also said that the 1% pay rise for public sector workers, following on from the current pay freeze, will wipe out the ‘pay premium’ male public sector workers enjoy compared to their private sector counterparts.
But it said that the scrapping of the fuel duty rise planned for January will benefit those with higher incomes.
What do you think? Is the IFS right? And is this pain necessary? Let us know your views in the comment box below!
More: Four things the Chancellor got right | Autumn Statement: what it means for you
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"“One begins to run out of superlatives for describing quite how unprecedented that is,” it said in response to its findings." Not if you have the least grasp of history, it ain't. The delusion that living standards will rise gently year by year for ever, independent of any effort you put in, belongs strictly to the soft generations of the Baby Boom and after. These little Eloi were brought up in the post-1945 welfare state, their brains rotted by silly delusions about equality and Funnermental Yooman Rites. For most of the sentient creatures who have ever walked, crawled or bled and died on this planet, life has not been a feather bed stuffed with paper money. It has been as much about hunger, disease and early death, fear of being invaded or assaulted and with Hell at the end of it as about the occasional good times that rolled in between. It is today's humanity that lives unnaturally. Now the idea that the modern Brit's bloated, hollow prosperity based on consumerist tat and meaningless experiences such as 'holidays' might be reined in a bit for a few years is supposed to cause conniptions-- in the country whose near ancestors survived the Great Depression, two world wars and Spanish flu. The Four Horsemen are mounted in the stable, their fearsome steeds are pawing the floor and are ready to bust through the rusted, fragile lock of the stable door. Beware and grow up!
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Failling incomes for the many means even more fro the GRUMPs (greed rich uncaring mean people). Taxes amy not help because they will be shunted by the few on to the poor.
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The bosses of the banks will still do well, but maybe they will give into government and shareholder pressure and cut bonuses for top managers; not themselves of course. I see no one destroying wealth and so I see a shift of wealth from the workers and middle classes to the already wealthy. Those that have it, will have more; as usual. The government could introduce a 'mansion tax' or a 'financial transactions tax' but they have no intentions of doing so; they will squeeze the little people until the pips squeak.
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01 December 2011