Households £1,500 worse off since Brexit vote

The UK has experienced the sharpest slowdown in income growth of any comparable economy according to the Resolution Foundation study.

Higher than expected inflation has also contributed to households’ spending power falling far below forecasts from before the 2016 European Union referendum.

The combination meant households had £1,500 less disposable income on average than they would have had under the Office for Budget Responsibility (OBR) pre-referendum forecast.

The report came out as official GDP figures are expected to show the UK economy at the end of 2018 was 1.1% – some £23 billion – smaller than the OBR pre-referendum forecast in March 2016, the think tank said.

That figure is equivalent to £800 for every household in the UK.

James Smith, research director at the Resolution Foundation, said: ‘Two and a half years since the UK voted to leave the European Union, the country’s post-Brexit position remains far from clear.

‘There has been much discussion about the impact of this uncertainty on businesses, but not enough about its effect on household incomes.

‘The UK’s stark under-performance on income growth since 2016 – which has tailed off more than other advanced economies – has left UK households taking a £1,500 hit to their living standards.

‘As we approach Brexit day on March 29, politicians in all parties need to recognise how much is at stake for family living standards and that how the country goes forward, not just where it is heading, matters for household incomes in the here and now.’

The report acknowledges that ‘no-one can say definitely how much of that lost income is exclusively down to the Brexit effect but it’s hard not to conclude that Brexit must be the single biggest factor’.

It also says the ‘messy’ political wrangling as Theresa May decides how to proceed with leaving the EU means ‘there are good reasons for thinking that it is not just Brexit itself but also Westminster’s handling of it that comes with a price tag’.