Families face £5,000 pay cut compared with what might have been expected before 2008 financial crisis
Incomes face a 'spectacularly' poor period, with no real-term growth in the next two years and only modest improvements in the following three
WAGES will stagnate and inequality will rise in the next five years, a think tank forecasts.
Incomes face a “spectacularly” poor period, with no real-term growth in the next two years and only modest improvements in the following three.
Tom Waters, of the Institute for Fiscal Studies, said: “By 2021/22 incomes would be more than 15 per cent below where we might have expected before the 2008 financial crisis hit — equivalent to over £5,000 per household per year on average.”
If the projections are correct it will be the furthest incomes have lagged behind trend for at least 60 years, says the IFS.
The top fifth of households are projected to enjoy a five to seven per cent boost in the next five years.
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But the bottom fifth will see incomes fall, largely due to cuts in benefits. The report also predicts a rise in absolute child poverty, taking it back to early 2000s rates.
The gloomy forecast comes after a decade in which average incomes grew by only five per cent above inflation, leaving them more than ten per cent below what might have been expected before the crash.
The IFS found the average incomes of those aged 22 to 30 were only now recovering to 2007/08 levels. Pensioners saw incomes grow by 15 per cent in the same time.
Campbell Robb, of research group Joseph Rowntree Foundation, urged parties to set out plans to help the poor, adding: “These are troubling figures.”