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The UK is now the only country in the G7 where household budgets are still not back to where they were before Covid hit, according to new research.
Analysis from the Trades Union Congress (TUC) suggests the UK is facing the worst decline in living standards out of all its counterparts in the forum.
In fact, the findings – based on figures from the Organisation for Economic Co-operation and Development (OECD) – real household disposable incomes were still 1.2% lower in the second quarter of 2023 than they were at the end of 2019, shortly before the first lockdown hit.
Meanwhile, across the G7, real household disposable incomes grew by 3.5% on average – although there was still significant range between countries.
The US saw an increase of 6%, Canada 3%, France 2.4%, Japan 0.5%, Germany 0.2% and Italy 0.1%.
The union also estimated that British families would be £750 better off each year if the UK’s real disposable income had kept up with the other leading economies.
TUC general secretary Paul Nowak said the findings were a “damning indictment on the Conservatives’ economic record”.
He added: “Their failure to deliver decent growth and living standards over the last 13 years has left millions exposed to skyrocketing bills – and is pushing many deeper into debt.
“We can’t go on like this. Britain cannot afford the Tories for a day longer.”
Although Rishi Sunak did manage to deliver on his pledge to halve inflation by the end of 2023 (cutting it to 3.9%), predictions from the Office for Budget Responsibility predict disposable income per person will fall by an extra 3.4% by the end of 2024′s first quarter.
Sunak also broke a key pledge after the economy shrunk last year, when official figures found GDP fell by a bigger-than-expected 0.3% in October.
TUC’s findings come as the UK’s tax burden remains heavy, interest rates are at a 15-year-high, and the cost of living crisis has dragged on for more than two years.
The same forecasts suggest we won’t be back on track with disposable income until 2026, while living standards will not return to their 2008 levels until 2028.
The union estimated that since the financial crash 15 years ago, the average worker has lost £14,800 as the UK has fallen behind real wage trends.
TUC also previously suggested unsecured debt like credit cards and loans will increase by £1,400 per household, in real terms, this year.
Only last month, the Resolution Foundation and LSE suggested British workers are missing out on £10,700 each year – and that a living standards gap worth £8,300 now exists between the UK and other comparably wealthy countries.
