Disposable income figures confirm real wage squeeze

Official figures today confirm the real wage squeeze that continues to be faced by working families despite average household disposable income hitting a record high.

According to the Office for National Statistics', the UK's median household saw their inflation-adjusted, post-taxation income rise £700 to £26,400 last year, £400 above the £26,000 peak reached in the 2007/2008 financial year.

But the net income of "non-retired" households has still not recovered since the financial crisis and at £29,200, is £400 below the pre-crash zenith.

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The figures broadly accord with an analysis of OECD data published by the Trade Union Congress last month, which claimed that since 2005, "real wages" in the UK - pay growth minus inflation - had fallen ten per cent by last year.

While the government data tracks a slower decline, the trend in both is clear: real wages dropped in the years since the financial crisis, only recovering after the slump in inflation that came with the nosedive in the oil price in 2014.

The overall average was dragged higher by retired households, whose income is protected by a controversial "triple lock" that guarantees a 2.5 per cent a year increase in their state pension. Their average disposable income was £21,500 - £1,700 higher than in 2007/2008.

Things could get worse for working age households, says the Daily Telegraph, as wages are expected to fall in the wake of the vote for Brexit while inflation could surge due to a slump in the pound.

"The already sluggish growth in nominal wages will probably slow sharply, reflecting weaker labour demand and a reluctance of employees to bargain hard for wage increases," said Kallum Pickering, from Berenberg Bank.

"With inflation rising to at least the [Bank of England’s] 2pc target by early next year, real wages are likely to fall during 2017."