UK household income surges but still lags boom-era peak

The UK economic recovery is gathering pace according to official data, with growth figures for the first three months of 2015 revised upwards and the disposable income enjoyed by UK households now thought to be surging at the fastest rate since 2001.

Reuters reports the Office of National Statistics has, as expected, revised growth from January to March from 0.3 per cent to 0.4 per cent, and on an annualised basis for financial year which ended in April from 2.5 per cent to 2.9 per cent. It also updated the figure for 2013/2014 to three per cent, the fastest growth seen since 2006, before the financial crisis.

Real disposable income, that is income after tax and adjusted for inflation, has increased by 4.5 per cent in the past year. This is the fastest rate in 14 years and is the result of a combination of accelerating wages and negligible inflation.

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Critics have, however, noted that real incomes remain depressed relative to their boom-era peak, with The Guardian and The Times pointing out the £24,500 median earnings figure is around £500 below the inflation-adjusted equivalent for 2007/2008.

The Guardian also notes inequality in the numbers, with pensioners, whose incomes are currently protected by a controversial 'triple lock', enjoying a 7.3 per cent rise in income since pre-crisis days. In contrast non-retired households have seen their incomes fall 5.5 per cent.

The Independent and Daily Mail also highlight tax-take figures, which show the poorest households are paying the largest percentage of their income in taxes. This is because they pay by far the largest proportion on indirect taxes such as VAT, which is applied at the same rate to all taxpayers.

The poorest fifth of households paid out 37.8 per cent of their income in taxes in 2013/2014, compared to 34.8 per cent for the richest fifth. However, the richest fifth paid substantially more in tax, contributing £29,200 compared with £4,900.