Monday, 17 November 2008

UK real incomes are falling

This chart should have a grim resonance for most of us; it tracks the six month change in real post tax income per head. In other words, income adjusted for inflation.

Real incomes have been falling during 2008, and when that happens households can have two options. They can reduce expenditure or they can borrow more.

In the past, most households took the second option. For example, real incomes fell back in 2005, however, household borrowing increased. This year, the credit crunch has encouraged more thrift. Hence, household consumption is on the slide, and this has pushed the UK economy in recession.

This also explains why Brown, Darling and the Bank of England are so keen to get us back to our old habits of borrowing. They think the UK public will get restless without our weekly narcotic of a trip to the shopping centre.

5 comments:

Seema said...

So it is not just me. Everyone is getting poorer.

Mark Wadsworth said...

I'd known that real incomes had been falling for over a year, I didn't realise that this had been the case for three years. I live and learn.

Nick von Mises said...

Certainly no surprise.

Tax rises > more wealth sucked from the efficient to the inefficient

Spending rises > saving declines > less capital available to create productive goods > less productivity

Socialist education > skill-less moronic school leavers > crappy labour

Seeing as real wage increases are the result of applying progressively skilled labour to progressively specialised productive goods, then it's ABSOLUTELY OBVIOUS that the real gains from the private economy are going to be sucked away by the sixty year welfare state / corporatist death spiral

Anonymous said...

I live in inner city London. The recession/depression started in 2005 and hasn't got better. I noticed then everything came to a halt, and the number of drunks and beggers has just shot up this year. I hate to say it, but it has a lot to do with all the money they are blowing on the two wars. Killing muslims is expensive. Dang!

Anonymous said...

Killing muslims is expensive. Dang!

Yeh - It's cheaper do do it at home, though ;->