Death of the middle class? 70% of Brits saw their incomes stagnate after crash
Up to 70 percent of people in Britain saw their incomes stagnate between 2005 and 2014, the decade covering the financial crisis, according to a new report on the impact of the recession.
Research by McKinsey Global Institute found that half a billion people in 25 of the West’s richest countries suffered from flat or falling pay packets during the nine-year period. That means 540-580 million people did not get any wealthier during that time.
This compares starkly with the period of 1993 to 2005, when only two percent of households in developed countries did not see their incomes rise.
The report, titled “Poorer than their Parents: Flat or Falling Incomes in Advanced Economies,” highlights fears for the prosperity of young people.
People who had seen no increase in their income were more pessimistic about their children’s future and were likely to be more negative about removing trade barriers and restrictions on migration, the report says.
“Our survey also found that those who were not advancing and not hopeful about the future were more likely than those who were advancing to support nationalist political parties such as France’s National Front, or, in the United Kingdom, to support the move to leave the European Union,” the report says.
The deep slump and weak recovery after the 2008 financial crisis, part-time and temporary jobs pushing out full-time employment, and a decline in the influence of trade unions were the main causes behind the phenomenon, it says.
It warned that if the “slow growth” conditions of the past decade persist, up to 80 percent of households could face flat or falling incomes over the next decade.
“Most people growing up in advanced economies since World War II have been able to assume that they and their children will be better off than their parents and grandparents – and for most of the time, that assumption is correct.”
However, it says things have now changed because of a “potentially corrosive social and economic development.”
The study took an in depth look at incomes in six developed countries – France, Italy, the Netherlands, Sweden, the UK and the US – and then scaled the findings up to include a further 19 nations for a total of 25.
Of the six countries picked out, 97 percent of Italian households saw their incomes fall or remain stagnant in the decade ending in 2014, while 80 percent of US households did, as well as 70 percent for those in both the UK and the Netherlands, 63 percent of those in France, and 20 percent of those in Sweden.
