Recession slashes family spending power by 10 per cent – households shell out on spiralling transport costs but are cutting back on clothes and shoes to pay for itIt cost 483.80 a week to run a British home in 2011Transport cost 65.70 – the biggest household expenseRising cost of fuel and insurance blamedSpending on clothes, shoes and furniture fallsCinema and sports spending up as Britons seek escape



02:00 GMT, 5 December 2012

The spending power of the average family has taken a historic plunge over the past five years, official figures showed yesterday.

The amount a typical household is able to pay to cover all its necessities and luxuries has dropped by nearly 10 per cent since the onset of the recession.

An average home had almost 50 a week less to spend last year than it did in 2006, once inflation has been taken into account.

Rising costs: Transport is the largest cost the British family faces as they battle to make ends meet

Rising costs: Transport is the largest cost the British family faces as they battle to make ends meet

And families’ real buying power is now back to the levels of 1996 and 1997, just before the long boom which ended in the banking collapse of 2007 and 2008.

Family expenditure has now declined in real terms for five years in a row – the greatest blow to living standards since official surveys on household spending began in the 1950s.

The figures compiled by the Office for National Statistics show that in 2006 a typical family was spending 533 a week at 2011 prices.

That dropped steadily through the recession to 483.60 last year.

The fall since 2006 amounts to 9.3 per cent and means that households on average are able to spend 49.40 a week less now than they could then.

Economist Ruth Lea said: ‘People are really hurting.

‘The recession of the 1970s was relatively shallow. The early 1980s recession was not, but we were out of it in four years. The 1990s recession hit house prices, but it only lasted three years.

‘This time it seems there is no chance of recovery before 2015.’

In bald figures, average family spending went up by 10 a week in the year between 2010 and 2011.

But that does not take account of inflation and does not reflect families’ real spending power. Over the past year, weekly spending in real terms fell by 14.60.

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Expensive: Running a family car is getting more and more expensive because of fuel and insurance costs

Expensive: Running a family car is getting more and more expensive because of fuel and insurance costs

The inflation-adjusted figures showing
six years of spending decline are unmatched since the survey began.
Other real terms spending declines were reported in the recession years
of 1974, 1980 and 1981, and 1991.


The South East of England has the highest share of the UK’s wealthiest households, while Scotland has the lowest, according to official figures.

More than one in seven households in the South East are in the top 10%, compared with one in 14 of Scottish households, said the Office for National Statistics.

The wealthiest 10% of households have almost 1 million in cash and assets, while the top 1% have more than 2.8 million.

TUC general secretary Brendan Barber said: 'These regional inequalities are making whole areas of the country unaffordable, creating employment blackspots in other parts and are holding back our economy.'

Although survey methods used to measure family spending have been changed over the past 15 years, the figures indicate that the last time outgoings fell below 490 a week was in the financial year 1996/97, when the economy was still recovering from the recession of the early 1990s.

The ONS survey covered the spending of 26,000 homes.

It follows checks on how families spend their money – made by asking people to keep weekly spending diaries – which have been carried out annually since 1957.

The biggest rise in costs in cash terms was for cars, car insurance, maintenance and fuel, which rose to 65.70 per week, up 80p from the previous year.

Recreation and culture, including tickets for the cinema and sporting events, took up the next highest chunk of families’ spending, costing 63.90 a week on average.

Housing – excluding mortgage payments – fuel and power came next at 63.30 a week in 2011, a weekly increase of 2.90.

The richest 10 per cent of homes can afford to spend more than 1,000 a week, the ONS report said, including nearly 100 a week on restaurants and hotels. Those whose incomes are in the bottom third spend a total of only 260.70 a week.

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