This paper brings together trends in inequalities in income, wealth and, to a limited extent, consumption in the United Kingdom, with a focus on trends until the onset of the COVID-19 pandemic. It considers how trends in wealth compare with the much better known trends in income inequality, and the extent to which changes to the shape of the income distribution – especially at the top – are hidden by an unchanging Gini coefficient. And it explores the key differences between groups in society, and especially between those in different birth cohorts.

In 2019, the employment rate among 25- to 64-year-olds in the UK reached 80 per cent - the highest on record, and considerably higher than the 76 per cent rate recorded shortly before the Great Recession. In this paper, we investigate the growth in employment between the eve of the Great Recession and the eve of COVID-19 across several dimensions. We analyse which sectors, demographic groups and regions accounted for the rise. We also investigate how job 'quality' - in both financial and non-financial terms - has changed. We find that almost all demographic groups and regions saw a rise in employment, especially those with low pre-existing employment rates and those near the bottom of the income distribution. Hourly pay growth was very weak over the period, with the median actually slightly falling. Other indicators of job quality show a more mixed picture: employees seem to have greater appreciation of their work and firm, but perceive less security and flexibility in their job.

In this report, we use a novel source of real-time data on households’ finances from Money Dashboard, a budgeting app, to explore the impacts of the crisis so far on earnings, incomes and financial distress, and how they are evolving. We complement this with household survey data to explain and verify the key trends.

The public health response to the COVID-19 pandemic is likely to reduce household incomes as workers lose their jobs, earnings fall, and plummeting share prices and interest rates lead to lower incomes from savings and investments. Newly released official statistics on incomes and poverty in the UK in 2018–19, published by the Department for Work and Pensions (DWP), show this downturn will come after a sustained period of income stagnation in the latter half of the last decade – which itself followed only a brief recovery from the late 2000s recession. This briefing note summarises what the newly released data for 2018–19 tell us about changes in living standards, income inequality and poverty over recent years. A more in-depth study of these trends, funded by the Joseph Rowntree Foundation, will be published in early summer. The new data show that median income fell 1% in real terms between 2017−18 and 2018−19, leaving average income essentially unchanged since 2015−16. Recent trends have been worse for low-income households: their living standards in 2018−19 were the same as in 2013−14, amounting to five years of income stagnation. The highest-income 10% have fared better in recent years, with relatively robust income growth since 2015−16.

Key findings• Median (middle) household income stalled completely in 2017-18 (the latest data).This was only the fourth year in the last 30 years in which household incomes have not grown.It leaves median income only 5.6% higher than 10 years earlier in 2007-08, before the Great Recession.Prior to this year, however, the recovery had seen reasonable income growth -median incomes grew at a rate of 1.6% a year from their low point in 2011-12 until 2016-17, which is higher than the pre-recession rate of 1.2% per year seen from 2002-03 to 2007-08.• The key driver for stalling income overall has been employee earnings growth being lower than inflation in 2017-18.Real median employee earnings fell by 0.3% in 2017-18.Although nominal (cash-terms) earnings growth was similar to the previous year, inflation rose from 0.9% to 2.7% as a result of the lower sterling exchange rate following the EU referendum.• Reductions in the reported amounts of working-age benefits pushed down incomes of poorer households in 2017-18.This depressed the net incomes of poorer families, while incomes for middle-and high-income families stagnated or slightly grew.The bottom fifth of the income distribution on average saw its income decline by 1.6% in 2017-18; conversely, the top fifth saw it grow by 0.8% and the middle fifth on average saw no movement in income over this period.