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Economic living standards in the UK

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Find out how income, spending, savings and borrowing – things that affect our living standards – have changed in the last 10 years.

Published in: Economy & Finance

Economic living standards in the UK

  1. 1. Economic living standards in the UK How the financial situation of households has changed in the last decade Ms.Statistics Ms.Statistics
  2. 2. Our financial situation - levels of personal and household income, spending, borrowing and saving - greatly affects our standard of living Ms.Statistics Ms.Statistics
  3. 3. The UK economy has seen a lot of change in the last 10 years, from the recession to the Brexit vote, but how has our financial situation been affected?
  4. 4. Income, Spending, Saving and Borrowing Ms.Statistics Ms.Statistics
  5. 5. After taking price changes into account, disposable income per head was just 2% (around £100) higher in the year following the Brexit vote compared with 2007* Quarterly real disposable income per head, UK, 2007 to 2017 Source: UK Economic Accounts, ONS *The year since the Brexit vote refers to the period from Quarter 3 2016 to Quarter 2 2017. 2007 refers to the period from Quarter 1 to Quarter 4 2007. Income Ms.Statistics 4,100 4,200 4,300 4,400 4,500 4,600 4,700 4,800 4,900 £ '17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1 Brexit voteRecession
  6. 6. The richest areas have seen their income rise by more than the poorest. The difference between the area with the highest and lowest income per head widened by nearly a third between 2007 and 2015 Annual gross disposable income per head, 2007 and 2015 Source: Regional gross disposable household income, ONS Income Ms.Statistics 0 10000 20000 30000 40000 50000 60000 £ Kensington, Chelsea, Hammersmith and FulhamNottingham 2007 Difference: £30,998 £11,079 £12,779 £42,077 £52,298 Difference: £39,519 2015
  7. 7. Changes in spending have a major impact on economic growth: household spending made up 63% of GDP in 2016 Spending Ms.Statistics Ms.Statistics Ms.Statistics
  8. 8. Our spending has edged above its pre-recession level in the last year. A typical person spent £49 (1%) more per quarter, on average, in the year following the referendum than in 2007 Quarterly real spending per head, UK, 2007 to 2017 Source: UK Economic Accounts, ONS Spending Ms.Statistics 3,800 4,000 4,200 4,400 4,600 4,800 £ '17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1 Brexit voteRecession
  9. 9. While income and spending have increased in the last 10 years, what we have available to save has dropped in that period Saving Ms.Statistics Ms.Statistics
  10. 10. An average household had 5.4% of their income available to save in the year following the Brexit vote, down from 8.2% in 2007 Households' saving ratio, UK, 2007 to 2017 Source: UK Economic Accounts, ONS Saving 0 2 4 6 8 10 12 14 % ‘17 Q1‘16 Q1‘15 Q1‘14 Q1‘13 Q1‘12 Q1‘11 Q1‘10 Q1‘09 Q1‘08 Q1‘07 Q1 Brexit voteRecession
  11. 11. We save much less of our income than households in France and Germany and only slightly more than the US, where savings are traditionally low International comparisons of the households' saving ratio, 2007 to 2017 Source: UK Quarterly Sector Accounts, ONS *German data is annual rather than quarterly, and includes non-profit institutions serving households as well as households. Saving 0 2 4 6 8 10 12 14 16 18 % UK France USA ‘17 Q1‘16 Q1‘15 Q1‘14 Q1‘13 Q1‘12 Q1‘11 Q1‘10 Q1‘09 Q1‘08 Q1‘07 Q1 Germany
  12. 12. The fall in savings has coincided with a return to high borrowing seen before the recession, particularly in the form of consumer credit Borrowing Ms.Statistics Ms.Statistics
  13. 13. The amount of consumer credit (excluding student loans) reached its pre-recession level in Quarter 3 (July to September) 2017 Amount of consumer credit (excluding student loans), UK, 2007 to 2017 Source: Bank of England Borrowing 150 160 170 180 190 200 210 £ billion '17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1 Brexit voteRecession
  14. 14. Meanwhile, growth of mortgage lending has picked up in recent years, but remains well below the levels seen before the recession. Growth rate of mortgage lending (quarter on quarter a year ago), UK, 2007 to 2017 Source: UK Economic Accounts, ONS Borrowing 0 2 4 6 8 10 12 % '17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1 Brexit voteRecession
  15. 15. Overall, our debt is higher than our income, but the gap has closed since the recession. On average, debt was 31% higher than income in the year following the referendum, compared with 45% in 2007 Household debt to income ratio (four quarter rolling sum), UK, 2007 to 2017 Source: UK Quarterly Sector Accounts, ONS Borrowing 100 105 110 115 120 125 130 135 140 145 150 Debt as a % of income '17 Q1'16 Q1'15 Q1'14 Q1'13 Q1' Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1 Brexit voteRecession
  16. 16. Keep in touch For more information, visit our website www.ons.gov.uk www.facebook.com/ons www.linkedin.comwww.twitter.com/ons

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