Average UK family to take a punching - IFS

Updated: 
Supermarket trolleyThe average UK family faces at £2,000 plunge in income. New data from the Institute for Fiscal Studies (IFS) is predicting that consumer spending power will slump 7% between 2010 and 2013. For the average family this is a sharp knock. In fact, the greatest slump in disposable income since the 1970s. And it could take till 2015 before many households recover spending power they had in 2009.


Struggle to cope

It's estimated that a middle-earning couple with two kids will be £2,080 worse off in 2013 than in 2010, with real income falling, claims the IFS, from £30,056 per year to £27,976.

The biggest bogey is inflation. Incomes simply aren't keeping up with basic subsistence costs. Just as worryingly, the the report - sponsored by the Joseph Rowntree Foundation - reckons 25% of British children could be living below the UK official poverty line by 2021. By 2015, it's thought child poverty could rise by almost 100,000 a year.

Children at risk

Not good news for the government who are likely to argue that the IFS figures don't accommodate new welfare reforms, including the new Universal Credit, which is partly designed to combat child poverty.

From the other end, the shift of benefit calculations from the Retail Price Index rate to the less generous Consumer Price Index has moved the goalposts to the government's advantage. Potentially quite a damaging move.

Poverty, of course, is relative. But for those on lower to middle incomes, this is the group most vulnerable to an economic slump: less cash for groceries, petrol and diesel, holidays, the odd meal out.

The risk of a UK double dip recession has heightened. Especially for families - and there are many of these - carrying large amounts of personal debt.

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