British Household Wealth Slipping

May 16, 2013

Luke-Notley small (Custom)A new report from the Office of National Statistics (ONS) has shown that Britain has dropped significantly down a league table measuring international standards of living, dropping from 5th place in 2005 to 12th place in 2011.

To measure international wealth, the ONS looked at per capita wealth, using net national income per head (NNI) to get an accurate picture of economic success. The ONS research showed that the average British income per head was £19.344 in 2011, much lower than the figure recorded in 2005.

The figures show that Britain was impacted significantly by the recent financial crisis and the resulting recession.

In direct contrast to this, by 2010 Germany had recovered to its pre-recession level of NNI per head, the ONS said.

In 2005, British households had the fifth highest spending power in the world, falling only behind the US, Norway, Luxembourg, and Germany.

By 2011, British disposable income ranked 12th overall, having fallen behind countries including France, Canada and Belgium.

According to the ONS, British households were “living beyond their means, spending not just from their income but also their savings, or borrowing to fund spending.”  It found that Britons are much more inclined to borrow money instead of save money than citizens from other countries.

Figures showed that between 2005 and 2011, French households saved 11.8 per cent of their income, and Germans 10.9 per cent. However, the UK figure was -1.1 per cent.

The ONS said that high inflation was also part of the reason why Britain has fallen so far behind other countries.

“Between 2005 and 2011 the prices of goods and services in the UK has increased relative to other countries,” the ONS said. “As a result, although household income in the UK has grown, when compared to other countries that income doesn’t stretch as far.”

The ONS report ranked the US top in terms of disposable household income, with Luxembourg second. Out of the 30 countries analyzed, Chile was ranked bottom.

Former British Chancellor Alistair Darling warned that Britain’s economy could be ‘bumping along the bottom’ for 10 years or more as economic conditions fail to improve.