Skip to content

Incomes squeezed more than in previous recessions

Released: 23 October 2012 Download PDF

Real national and household incomes have been falling due to a combination of the recession and high inflation. That is the analysis published today by the Office for National Statistics (ONS) as part of the Measuring National Well-being Programme.

The data describes an economy that has been stagnating:

• In the second quarter of 2012 net national income (NNI) per head in real terms was 13.2 per cent below its pre-recession level in the first quarter of 2008; a sharper fall in economic well-being than the 7.0 per cent fall that GDP per head data indicate.

• In the second quarter of 2012, real household actual income per head was 2.9 per cent below its peak in the third quarter of 2009

• Household incomes have generally been eroded by price inflation, for example in September 2011 inflation peaked at 5.2 per cent whereas the annual rise in household actual income per head was 1.9 per cent in the third quarter of 2011

• At the end of 2011 national debt was in excess of one trillion pounds, the first time on record, and equivalent to 65.7 per cent of GDP.

In a recent ONS report the economy was described as important in the measurement of national well-being, in other words how it affects people and its impact on all of us financially. This analysis, published today, explains how living standards are more closely aligned with NNI, the total income available to residents of that country. The NNI estimates indicate that the fall in the economic well-being was sharper than the GDP data alone indicate.

The article compares real household actual income (RHAI) per head during the 1990s recession and the recession that began in 2008. In the 2008 recession, initially household income held up better than in the 1990s recession. This was partially a result of unemployment not rising to the same extent as in the previous recession, and historic low interest rates reducing mortgages payments for those on tracker mortgages.
In contrast to the recovery from the 1990’s recession, however, as the economy emerged from the contraction that started in 2008, real household incomes began to fall; a downwards trend that continued to the start of 2012. The cause of this fall was primarily due to an increase in prices, such as fuel, utility bills and food. The increase in prices eroded the growth of household incomes, meaning real household actual incomes fell and therefore incomes would not stretch as far as they would previously.

More analysis is contained in the article “Measuring National Well-being – the Economy” which reports that with the onset of the recession in 2008 the economic well-being of the nation has been affected by a general reduction in real national and household incomes.

Background notes

  1. More information about the Measuring National Well-being Programme and all publications from the Programme are available at
  2. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
  3. Details of policy governing the release of new data are available from Media Relations Office


  4. © Crown copyright 2012.
  5. Details of the policy governing the release of new data are available by visiting or from the Media Relations Office email:

Content from the Office for National Statistics.
© Crown Copyright applies unless otherwise stated.