Wednesday, 19 October 2011

Young hit greatest in the last recession

New research out today shows that falls in household consumption have been deeper than in either of the previous two recessions and that young people have been particually hard hit.

The report this morning by the Insititute of Fiscal studies has found that the average income of households where the eldest member was aged under 35 slumped by 8 percent, with their spending down 7 percent.

This compared with an average fall of 2 percent in income and 5 percent in spending for households aged 35-65, with no significant change in that of households above retirement age, making a greater age disparity than in either of the country's two previous recessions.

The report found that the tendency for household saving to rise in recessions occurred for almost all types of household.

Exceptions to this included the youngest households in the most recent recession who, on average, faced with very large falls in income, did not increase their saving and owners-outright in the most recent recession.

It also found that the extent of the additional saving in the most recent recession was particularly striking for those currently paying off mortgages.

Across all age groups household expenditure fell by 5 per cent in real terms between 2008 and the first quarter of 2009, when Britain was last officially in recession, but unlike the previous two downturns, in 1980-81 and 1990-91, spending has still not recovered to its pre-recession levels.

Food purchases were significantly lower in the last recession due to higher food prices, along with lower spending on holidays, alcohol and eating out.

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