While this comes as no surprise to the British public, it does explain why so many of us have been struggling financially; supposedly we’ve only had about £280 of disposable income to spend each week in the first three months of this year. This is the least we’ve had to spend, on average, compared to any other quarter since 2003.
The ONS says this is because prices have risen, wages haven’t increased as much and the population has also grown.
Disposable income is calculated as the amount of money individuals have to spend after taxes.
Household income, spend and savings
At the same time as disposable income is decreasing, families are feeling the financial squeeze in other areas.
Considering inflation, the average household income (per head) is also at its lowest level since the second quarter of 2005. Not surprisingly, the actual spend per head was at its second lowest level since 2004 and household saving is also the lowest it has been in the past year.
Did we mention that pay rose only 0.6% from 2011, which is the lowest pay growth rate since March-May 2009? (No wonder our wallets are hurting so much!)
Mortgages and repossessions
It turns out that the total number of mortgages peaked in 2007 – a year before the financial crisis hit – and then repossession peaked in 2009. (We’re going to take a wild guess and say that’s not a coincidence.)
The good news is that repossession has slowed (which means more people are able to afford their mortgage payments) and constraints on mortgage lending has eased. So residential household wealth (the value of all houses owned by the household sector) has grown from 2009 and 2010. And while this growth continues, it slowed in 2011 when housing prices began to fall.
While we’re waiting for the ONS to release its next report about our economic positions (its due out in October if you’re curious), we’d love to hear your opinions about all this. Please share them in the comments below!