Economic living standardsin the UK

How the financial situation of householdshas changed in the last decade

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Our financial situation -levels of personal and

household income,spending, borrowing and

saving - greatly affects our standard of living Ms.Statistics

Ms.Statistics

The UK economy has seen a lot of change in the last 10 years, from the recession to the Brexit vote,

but how has our financial situationbeen affected?

Income, Spending, Saving and Borrowing

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After taking price changes into account, disposable income per headwas just 2% (around £100) higher in the year following the Brexit vote

compared with 2007*

Quarterly real disposable income per head, UK, 2007 to 2017

Source: UK Economic Accounts, ONS*The year since the Brexit vote refers to the period from Quarter 3 2016 to Quarter 2 2017.2007 refers to the period from Quarter 1 to Quarter 4 2007.

Income

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4,100

4,200

4,300

4,400

4,500

4,600

4,700

4,800

4,900

£

'17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1

Brexit voteRecession

The richest areas have seen their income rise by more than the poorest.The difference between the area with the highest and lowest income

per head widened by nearly a third between 2007 and 2015

Annual gross disposable income per head, 2007 and 2015

Source: Regional gross disposable household income, ONS

Income

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0 10000 20000 30000 40000 50000 60000 £

Kensington, Chelsea, Hammersmith and FulhamNottingham

2007Difference: £30,998

£11,079

£12,779

£42,077

£52,298Difference: £39,519

2015

Changes in spending have a major impact on economic growth:

household spending made up 63% of GDP in 2016

Spending

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Our spending has edged above its pre-recession level in the last year.A typical person spent £49 (1%) more per quarter,

on average, in the year following the referendum than in 2007

Quarterly real spending per head, UK, 2007 to 2017

Source: UK Economic Accounts, ONS

Spending

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3,800

4,000

4,200

4,400

4,600

4,800

£

'17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1

Brexit voteRecession

While income and spending have increased in the last 10 years, what we have available to save

has dropped in that period

Saving

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An average household had 5.4% of their income available to savein the year following the Brexit vote, down from 8.2% in 2007

Households' saving ratio, UK, 2007 to 2017

Source: UK Economic Accounts, ONS

Saving

0

2

4

6

8

10

12

14

%

‘17 Q1‘16 Q1‘15 Q1‘14 Q1‘13 Q1‘12 Q1‘11 Q1‘10 Q1‘09 Q1‘08 Q1‘07 Q1

Brexit voteRecession

We save much less of our income than households in France and Germanyand only slightly more than the US, where savings are traditionally low

International comparisons of the households' saving ratio, 2007 to 2017

Source: UK Quarterly Sector Accounts, ONS*German data is annual rather than quarterly, and includes non-profit institutionsserving households as well as households.

Saving

0

2

4

6

8

10

12

14

16

18

%

UK

France

USA

‘17 Q1‘16 Q1‘15 Q1‘14 Q1‘13 Q1‘12 Q1‘11 Q1‘10 Q1‘09 Q1‘08 Q1‘07 Q1

Germany

The fall in savings has coincided with a return to

high borrowing seen before the recession,

particularly in the form of consumer credit

Borrowing

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The amount of consumer credit (excluding student loans)reached its pre-recession level in Quarter 3 (July to September) 2017

Amount of consumer credit (excluding student loans), UK, 2007 to 2017

Source: Bank of England

Borrowing

150

160

170

180

190

200

210

£ billion

'17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1

Brexit voteRecession

Meanwhile, growth of mortgage lending has picked up in recent years,but remains well below the levels seen before the recession.

Growth rate of mortgage lending (quarter on quarter a year ago), UK, 2007 to 2017

Source: UK Economic Accounts, ONS

Borrowing

0

2

4

6

8

10

12

%

'17 Q1'16 Q1'15 Q1'14 Q1'13 Q1'12 Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1

Brexit voteRecession

Overall, our debt is higher than our income, but the gap has closed since the recession. On average, debt was 31% higher than income in the year

following the referendum, compared with 45% in 2007

Household debt to income ratio (four quarter rolling sum), UK, 2007 to 2017

Source: UK Quarterly Sector Accounts, ONS

Borrowing

100

105

110

115

120

125

130

135

140

145

150

Debt as a % of income

'17 Q1'16 Q1'15 Q1'14 Q1'13 Q1' Q1'11 Q1'10 Q1'09 Q1'08 Q1'07 Q1

Brexit voteRecession

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