'Effects of recession delayed as living standards set to fall for years'
The most severe results of the recent recession have only just begun to be felt and living standards could continue to fall until at least 2013-14, according to the Institute for Fiscal Studies.
Its report on the impact on households of the recession - the worst for over 60 years - compares the UK with other developed countries.
It shows that the UK's 6% fall in GDP in the recession was average across developed countries and that employment fell by substantially less than GDP – it was 1.6 percentage points lower in 2009 than 2007. Again, this was somewhere in the middle of the international experience.
The report says UK households were relatively insulated from the immediate impacts of the Great Recession, as median net household incomes due to a slight growth in household incomes and a strong state welfare system focused on lower income families.
It adds, though, that the effects are now beginning to be felt and could last "a considerable length of time". IFS researchers estimate that in 2010/2011 average net household income fell by 3.5%, the largest single-year drop since 1981, returning it to its 2003–04 level.
Robert Joyce, a research economist at IFS and a contributor to the report, said: "The current economic downturn began more than three years ago, and may seem like old news. But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come."