 Outlook for UK Households, the Devolved Nations and the English RegionsArnab Bhattacharjee, Adrian Pabst, Robyn Smith and Tibor Szendrei National Institute UK Economic Outlook, 2024, issue 14, 48-75 Abstract: While aggregate real personal disposable income will grow this year, the distributional picture is different when accounting for housing costs and household composition: we find that living standards, as defined by equivalised household real disposable income (eHRDI), are still significantly lower compared with 2019 as the costs of rents and mortgages have wiped out the gains from real wage growth. The fall in living standards has hit the bottom half of the income distribution hardest: for households in the bottom-income decile, living standards as measured by eHRDI are lower by around 20 per cent compared with 2019-20 levels; for income deciles 2-4, the fall in living standards is on average around 8 per cent. Living standards will improve on average by 6 per cent in 2024-25 relative to 2023-24, but there are distributional differences: households in the bottom decile experience a 2 per cent fall, and those in the second decile a 5 per cent rise, while households in deciles 4-9 will see a 7-8 per cent rise. Targeted policy has helped the hardest hit households the most, while tax cuts have been regressive: the Cost-of-Living payments provided much-needed assistance to low-income households, while the 4p NIC cut benefitted high-income households disproportionately; the benefit for households in income deciles 2-4 was cancelled out by the freezing of the personal allowance and the income tax bands. Since 2022, the average household has received £2,000 in the form of state support: the bottom decile has received more state support (£2,100) than the average, but the top two deciles have also received more state support (£2,520 and £3,940 respectively). Employment is flatlining across all regions and continued revisions to regional employment data reflect uncertainty in the labour market: together with higher projected inactivity rates as the population ages, these highlight a strained labour market which could hinder future growth potential. Productivity differentials within and across the regions remain high and are a considerable drag on UK growth: this needs to be tackled structurally and is the central task for regional regeneration. Date: 2024 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesra:i:14:y:2024:p:48-75 Access Statistics for this article More articles in National Institute UK Economic Outlook from National Institute of Economic and Social Research 2 Dean Trench Street Smith Square London SW1P 3HE. Contact information at EDIRC. |
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