Families caught in the so-called “squeezed middle” have suffered a nine per cent drop in their income since the start of the recession, official figures show.
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By John Bingham, Social Affairs Editor
3:43PM GMT 18 Mar 2013
Households in the middle of the income scale have been battered by wages falling in real terms and a rising cost of living since the financial crisis of 2008, with increasing food and fuel prices among the biggest pressures on family finances.
Even though they are paying relatively less tax than they were at the onset of the recession, it is still not enough to counteract the effect of falling wages, the study shows.
According to the Office for National Statistics (ONS) the average middle class household has seen their disposable income drop from £31,100 a year in the financial year 2007 to 2008 to just £29,900 in 2010-11, a fall of almost four per cent.
The figures do not take into account living costs and other essential outgoings faced by families such as childcare and food.
Yet when their gross household income, before tax and other elements is included, the total fell by as much as nine per cent, dropping from £36,400 in 2007/08 to £33,200 the figures show.
The study charts the financial fortunes of the group middle fifth of the population over a period from 1977 to 2011.
It shows that the average disposable income of a working-age household at today’s prices roughly doubled over just under 35 years.
It rose markedly during the 1990s but slowed around 2003 and has dropped since the onset of the financial crisis in 2008.
The study also shows that while pensioners have progressively become better off in that time, families with children have been squeezed to the margins.
In 1977 households with children made up more than half (53 per cent) of the main middle-income strand of the population.
But by 2011 that had fallen to less than a third.
By contrast pensioners, who in 1077 accounted for only nine per cent of the middle band made up 31 per cent in 2011.
Over the same period the proportion of people in the middle who own their own homes has grown overall.
But the proportion currently stands significantly lower than at its height in the late 1980s when 70 per cent of middle income households owned their own home.
Today only 65 per cent do