The Resolution Foundation, an independent think tank committed to improving the lives of people on low and modest incomes, has published the findings of a new study entitled The Essential Guide to Squeezed Britain.
The study analyses the situation of 10 million adults, not heavily reliant on means-tested benefits, and their 5.2 million children.
The report says that millions of families aren’t likely to see their incomes return to pre-recession levels until 2020 at the earliest, whilst the wealthy will see their earnings continue to rise (by between 4% and 10% by 2020).
Researchers used the Office for Budget Responsibility’s latest forecasts to show that if sluggish growth continues for another 8 years, the average annual disposable income of these low-to-middle earning families would be £20,200 in 2020 (a £1,700 drop from 2007).
In order for the ‘squeezed middle’ to see their incomes return to pre-recession levels by 2020, the economy would need to grow at rates not seen for nearly a decade.
Matthew Whittaker, author of the report, described a “growing inequality of earnings” and warned “it may not be just those on low and middle incomes finding themselves left behind in the next decade, but rather the majority of society.”
Liam Byrne, Labour’s welfare spokesman, will debate the implications of the report with Lib Dem MP David Laws on Monday at the Resolution Foundation offices in London.