Working households have just £650 more to spend than before the financial crash, fresh official statistics have shown.
New ONS figures have underlined how disposable incomes went into sharp decline after the 2008 banking crisis and have grown just 0.2% over the last decade – a tenth of the rate of the preceding decade.
In the ten years before the financial crash, extra income grew by a comparatively-huge £7,200 (an average of 3.3% every year) and the TUC said Britain desperately needs a pay rise.
General Secretary Frances O’Grady said: “It’s been a historically bad decade for working people’s incomes.
“More people are working harder than ever, but their incomes have barely budged in a decade. That should set alarm bells ringing in Westminster.
“Britain needs a pay rise. Ministers should hike up the minimum wage and get investing across the UK.”
The small growth in household income was mainly driven by more households having work, the TUC added, before pointing out pay was actually lower, with average wages worth around £38-per-week less than before the financial crisis.
And the union warned that the paltry increase could be wiped out in the coming year, as real wages are expected to fall in 2018.
But there were reasons to be cheerful as there has been a small squeeze on income inequality. The average income of the poorest fifth has risen by £1,800 (15.0%) since 2007/8 while the disposable income of the richest fifth is only £200 (0.4%) above its pre-downturn level.
And the jump in household income came largely in the last year alone, with income climbing £600 (2.3% on the previous year) to £27,300.
Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said: “The solid, broad-based income growth Britain experienced in 2016-17 means that non-retired households have finally got back to where they were a decade earlier in terms of incomes, though this recovery has still been the weakest in living memory.
“This welcome income growth was driven by rising employment and low inflation. But with pay and benefits now falling in real terms and employment growth at an end, Britain’s living standards recovery may have proven short-lived.”
Head of Wellbeing and Inequalities Glenn Everett said: “Households have more disposable income than at any time previously.
“However, compared with their pre-downturn levels the incomes of the poorest households have risen nearly two thousand pounds but the incomes of the richest are only now slightly higher. Overall, income inequality has slowly fallen over the last decade.”