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Living standards finally hit pre-crisis highs

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Living standards have finally climbed above their level before the financial crisis a decade ago, according to figures from the Office for National Statistics.

The Resolution Foundation think tank said the figures show disposable income for non-retired households reached a new high in the 2016/17 financial year on the back of strong employment growth and low inflation. Typical after-tax income was 2% higher than in 2006/07.

Retirees were the strongest beneficiaries of the economic recovery, however, seeing their incomes rise 18% over the same period. The data also revealed a fall in income inequality over the last decade, although with a small uptick last year.

Adam Corlett, senior economic analyst at Resolution Foundation, said: “The solid, broad-based income growth Britain experienced in 2016/17 means that non-retired households have finally got back to where they were a decade earlier in terms of incomes, though this recovery has still been the weakest in living memory.

“This welcome income growth was driven by rising employment and low inflation. But with pay and benefits now falling in real terms and employment growth at an end, Britain’s living standards recovery may have proven short-lived.”

The TUC said working households have gained just £650 extra to spend since 2006/07, less than a tenth of what they gained in the previous decade (£7,200). TUC general secretary Frances O’Grady, said: “It’s been a historically bad decade for working people’s incomes. More people are working than ever, but their incomes have barely budged in a decade. That should set alarm bells ringing in Westminster. Britain needs a pay rise. Ministers should hike up the minimum wage and get investing across the UK.”

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