- Average Briton now receives £461 a week in wages, pensions and benefits
- Amount is £5 more than last year and almost back to 2007 levels of £463
- New figures come following a report by The Institute for Fiscal Studies
- Revealed pensioners are better off as their benefits have been protected
- But warned many young workers are still worse off than before recession
Household incomes are finally back to pre-recession levels – with the over-60s experiencing the greatest recovery, a report shows.
Britons now receive £461 a week in wages, pensions and benefits after tax, which is £5 more than last year and almost back to 2007 levels of £463.
News that the average UK income has bounced back could come as a timely pre-election boost for the Conservative party.
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Falling shop prices: Graphic above based on price changes between February 2014 and February 2015, according to data from Nielsen and the British Retail Consortium published today
But spending remains subdued as pessimistic workers fear the recession has had a ‘permanent’ impact on their pay, The Institute of Fiscal Studies said.
They also warned that, while pensioners were now better-off, younger workers were still on significantly lower incomes than before the financial crisis.
This is because workers have suffered badly from pay freezes while pensions, tax credits and benefits for the elderly have been largely protected.
Pensioners’ incomes are now 2 per cent higher than in 2007-08, while for those in their 30s, 40s and 50s, they are still 3 per cent lower than before the crisis.
Young workers aged 22 to 30 have been the worst hit and are still suffering from household incomes almost 8 per cent lower than seven years ago.
The report could leave the Government open to fresh accusations that ministers have pandered to the ‘grey vote’ at the expense of the younger generation, who are still receiving meagre pay rises.
Andrew Hood, of the IFS, said: ‘After large falls, and a historically slow recovery, average household income is now back to around its pre-crisis level.
‘However, the young have done much worse than the old, those on higher incomes somewhat worse than those on lower incomes, and those with children better than those without.’
The IFS said ‘living standards have changed differently for different age groups’.
Pensioners had been less affected by stagnated salaries because ‘fewer older people are in work’, but have also benefited a Government policy which protected pensions from the downturn.
The ‘triple lock’ guarantees that the State pension will rise every year in line with earnings, prices or 2.5 per cent, whichever is higher.
Yesterday, the Intergenerational Foundation said the report showed ‘the dismal position of young people’ in contrast to Britain’s thriving baby boomers.
A spokeswoman said: ‘These figures provide yet further evidence of the emergence of a packhorse generation – over burdened by previous generations’ debts while facing poor pay and conditions, high housing costs and a student tax in all but name.
‘Unless young people’s pay and living costs improve, older generations will need to look elsewhere for their old age care costs.’
The IFS also found that household incomes had recovered more slowly than during recessions in the early 1980s and early 1990s, claiming the slow recovery in incomes has been a ‘remarkable feature’ of the recent downturn.
Income grew by 2 per cent during the first three years of the recovery, compared to 9 per cent in the 1980s and 5 per cent in the 1990s.
A report by the Institute for Fiscal Studies has revealed that household incomes are finally back to pre-recession levels. Britons now receive £461 a week in wages, pensions and benefits after tax
The think tank said: ‘This is mainly the result of weak growth in earnings for those in work.
‘Tax increases and benefit cuts, implemented as part of the government’s deficit reduction plan, have also reduced incomes.’
Household spending is also still below pre-crisis levels after Britain became a nation of cautious spenders.
Consumption of goods such as food and fuel is still some way below 2008 levels, as workers continue to fear they will receive little or no pay rise in the next few months and years.
The IFS said this pessimism, combined with tougher restrictions on credit cards and loans, meant spending was still subdued, adding: ‘This may suggest that households think the recession has had a permanent impact on their income prospects.’
Dave Prentis, of Unison, said: ‘Workers are being told that the good times have returned, but many of them are yet to feel the benefit of the economic recovery themselves.
‘Money is still tight in many households, with lots of families still too nervous about the future to spend much beyond their everyday essentials.
‘For young people especially, the combination of low-paid jobs, unpredictable zero-hours work, the burden of student debt, and soar-away rent and property prices mean it will take a good while before they feel any recovery in their standard of living.’