Brits are still in a worse financial position than they were a decade ago, new research suggests.
Official data indicates that standards of living returned to pre-recession levels more than four years ago, in early 2015.
However, new research by the New Economics Foundation (NEF) suggests Brits are actually £128 worse-off, on average, than they were before 2008.
According to the NEF, this is because figures used to calculate GPD – which are adjusted for inflation – do not include increases made on tax on value (VAT) and import prices.
These rates were adjusted from 17.5% to 20% in 2010, under former Chancellor George Osborne, as part of the coalition government’s austerity measures.
Rising house costs and the falling pound were also excluded from calculations. All of these things have “a very real impact” on consumer prices in the UK, NEF said.
When the pound is strong, imports become cheaper. When the pound is weak, the price of imports rises, “feeding through directly into average consumer prices”, Alfie Stirling, the foundation’s chief economist, explained.
Taking these factors into account, household incomes were hit harder by the recession and have been slower to recover than official figures show, the report argues.
Fears of a Brexit-induced recession sparked last month, after the UK the economy unexpectedly shrunk for the first time in seven years, in the second quarter of 2019.
But economists are “missing the wood for the trees”, Stirling said. “For the majority of people, the lived experience [already] does not reflect an economy that is working for them.”