‘National well-being’ hit by fall in household incomes

National economic well-being is more than 13 per cent down on its level before the global financial crisis, according to a study by the Office for National Statistics. This is a sharper fall than the 7.0 per cent drop indicated by conventional economic data.

The study measures economic well-being by reference to 'net national income' (NNI), which is the total income available to a country's residents. This, the ONS says, gives a more accurate picture than crude trends in gross domestic product (GDP).

Key points

  • In the second quarter of 2012 net national income per head in real terms was 13.2 per cent below its pre-recession level in the first quarter of 2008.
  • The onset of the global recession in 2008 reduced economic well-being as a result of a general fall in real national and household incomes.
  • Initially household income held up better than in the recession at the start of the 1990s. This was partially a result of unemployment not rising to the same extent as then, and the impact of historically low interest rates on mortgage payments.
  • But in contrast to the recovery from the 1990s recession, real household incomes began to fall as the economy emerged from the contraction that started in 2008 – a downward trend that continued to the start of 2012.
  • The cause of this recent fall is primarily an increase in prices for fuel, utility bills and food.

Source: Gerard Carolan, Valerie Fender, Sue Punt and Damian Whittard, Measuring National Well-being – The Economy, Office for National Statistics
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