Average income 6% lower than in 2007-08

Average income in 2013-14 is 6% lower in than it was before the economic crisis began in 2007-08, according to research by the Institute for Fiscal Studies (IFS).

Its Green budget 2014: the squeeze on incomes found that this fall in average incomes has largely been driven by declines in real earnings.

It also found that the fall in median income is likely to have come to a halt in 2013-14, but that average earnings will not return to their 2009-10 levels until 2018-19.

Andrew Hood, research economist and an author of the report, said: “Our analysis puts together all the information we have to suggest that real median household income is still more than 6% below its peak, but it looks like it stopped falling this financial year.”

Frances O’Grady, secretary at the Trades Union Congress, added: “The IFS analysis shows that years of recession and stagnation have taken their toll on household finances.

“Last year’s recovery failed to improve people’s earnings and, unless things change, workers across Britain could face a decade of pay stagnation.

“If the government really wants to help hard-working people, it should lead by example and become a living wage employer, as well as using the £240 billion it spends in the private sector every year to encourage other employers to pay a living wage too.”