OBR projections confirm five years of the coalition leaves households poorer
If the government are looking for reasons why the public are not sharing their enthusiasm for the condition of the economy (eg ‘Optimism about the economic recovery is in freefall’, from yesterday’s Evening Standard ), they need look little further than the Office for Budgetary Responsibility’s recent projections of real household disposable income per capita.
Real household disposable income per capita, index 1997=100
(source: Office for Budgetary Responsibility, Economic and fiscal outlook, December 2014, supplementary economy tables )
The figures indicate that when 2014 is done household income will be one per cent below its level when the coalition took office (on average, with population and price increases taken into account). Over the whole of the Parliament the cumulative loss will amount to eight percentage points of the level of income in 2009/2010, in real terms.
In 2010 ahead of the general election the Chancellor heaped derision on the Labour Government:
Even through the dark days of the 1970s and the recessions of the early 1980s and 1990s, every full Parliament saw our GDP per capita grow. But not this Parliament. When people ask the famous question – “are you better off than you were five years ago?” – this will be the first election in modern British history when the answer from the government must be ‘no’.
In fact, as the chart makes blindingly obvious, real household disposable incomes rose across the previous Parliament, even in spite of “most damaging financial crisis in generations” (according to the government’s preferred interpretation).
It is at the next election when people, asked the “famous question”, will have to answer no.