The persistent myth about the financial crisis and living standards

22nd August 2018

It has become commonplace to describe the period since the Great Recession with lots of dramatic words—not only referring to the financial crisis itself, but how the economy and household living standards have stagnated. Growth in average living standards has been described as 'terrible' or 'disastrous', while there has been much talk of a 'cost of living crisis' and a 'squeezed middle'.

There are good reasons to think that household income growth has been very poor since the crisis. Between 2007-08 and 2011-12, real average household income (measured after taxes have been paid and benefits received) in the UK fell by 2.3 per cent, or by £600 per year. Then, as the recovery started, growth was weak at first but then strengthened. Household income rose by 8 per cent in the five years between 2011-12 and 2016-17—in other words it grew at 1.6 per cent per year.

See the full article at

https://www.ifs.org.uk/publications/13261