UK Real Household Incomes Fall for an Unprecedented 4th Quarter

Andrew Atkinson, Bloomberg News

A customer places an item in their shopping trolley at an Iceland Foods Ltd. supermarket in Christchurch, UK, on Wednesday, June 15, 2022. "Britain's cost-of-living crisis -- on track to big the biggest squeeze since the mid-70s -- will continue to worsen before it starts to ease at some point next year," said Jack Leslie, senior economist at the Resolution Foundation, a research group campaigning against poverty. , Bloomberg

(Bloomberg) -- UK household incomes fell for a fourth consecutive quarter at the start of 2022, the longest run of declines since records began in 1955, as the cost of living crisis worsened.

Adjusted for inflation, disposable incomes dropped 0.2% in the first three months of the year, the Office for National Statistics said Thursday. It left incomes 1.3% lower than a year, even before April’s tax and energy bill increases kicked in.

The saving ratio, the proportion of income left unspent, was unchanged at 6.8%.

The fall in incomes highlights the strain on households struggling to keep up with soaring prices of everything from energy and food to motor fuel and clothing. Prime Minister Boris Johnson is under mounting pressure to do more to help amid warnings that the economy is sliding into recession.

Gross domestic product grew 0.8% in the first quarter, the ONS confirmed. However, output has been on a weakening path since January, and the Bank of England now expects a contraction in the second quarter as consumers tighten their belts.

Separate figures showed the current-account deficit, the gap between money coming into the U.K. and money leaving, widened sharply to £51.7 billion ($63 billion) in the first quarter. That equated to a 8.3% of GDP, a record for the quarter.

The shift reflected a dramatic widening in the trade shortfall and a £17 billion swing from surplus to deficit in the balance on investment income.