Business

Households' spending power 'recovering'

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The typical level of disposable income - or spending power - available to households in the UK was £25,700 in 2014-15, official figures show.

This level of income - the median average - was £1,500 higher than the recent low of 2012-13, the Office for National Statistics (ONS) said.

It marks some recovery in incomes which had been hit by the financial crisis.

Retired households, whose state pensions have been protected, have had a much smoother ride.

Pension lock

The ONS suggested that household incomes during and after the financial crisis were moving at a different pace for retired households and working families.

The typical incomes of retired households rose by 7.7%, a total rise of £1,500, between 2007-08 and 2014-15.

Some income has been protected by the so-called triple lock - a government promise which means the state pension rises each April to match the highest of inflation, earnings, or 2.5%.

In contrast, non-retired households - including working families - have still not seen a full recovery of incomes compared to before the financial crisis. This group's household disposable income was still 3.1%, or £900, below the level seen in 2007-08.

Generations

Matt Whittaker, chief economist at the Resolution Foundation think-tank, said: "Strong jobs growth and ultra-low inflation have finally pushed living standards back above where they were before the financial crisis. But the downturn has been felt very differently between generations, and across the UK.

"This generational divide opened up well before the financial crisis landed. As a result, typical working age families are no better off today than they were a decade ago, while typical pensioner incomes are 15% higher.

"This divide is unlikely to widen in the coming years, but nor do we see any sign of narrowing. By 2020, pensioner incomes are set to be over a third higher than they were at the turn of the century - more than double the increase experienced by working-age households."

However, the ONS pointed out that the most recent increase in disposable incomes across UK households had been driven largely by average earnings rising faster than inflation and continued growth in employment rates.

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