Disposable income in UK households has fallen since the end of 2016 – but optimism about the economy is growing

UK households' real disposable income has fallen, according to the ONS.
Picture: James Bass

UK households' real disposable income has fallen, according to the ONS. Picture: James Bass - Credit: Eastern Daily Press � 2013

People in the UK are optimistic about their finances despite having fewer pounds in their pocket than a year ago.

Figures from the Office for National Statistics show real household disposable income (RHDI) fell by 2% in the first three months of 2017 compared with the same quarter a year ago, the largest decrease since the end of 2011, which was driven by the increasing price of goods and services.

The ONS' economic wellbeing indicators also showed a 0.2% increase in real household spending between the first quarter of 2017 and the last of 2016.

But over the same period consumers reported an improved perception of their own financial situation and that of the general economy.

It comes despite net national disposable income (NNDI) rising by 4.3% in the same period, which the ONS said was mainly due to a £6.9bn increase in the UK's foreign earnings.


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Gross domestic product (GDP) also rose by 1.3% in the first quarter of the year compared to the same period in 2016, but showed now growth from the previous quarter.

Dominic Webber, ONS head of economic well-being, said: 'Slower growth in the whole economy and a larger population means GDP per head was flat in the first quarter of 2017.

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'With prices rising and wage growth still modest, real household disposable income per head has now fallen at its fastest rate in over five years.

'In contrast, however, net national disposable income per head – which better represents all the income in the economy available to spend or save – has increased sharply. This is due to a £6.9bn increase in the UK's foreign earnings, driven in part at least by the devaluation of sterling.'

How are you feeling about your finances? Let us know – email bethany.whymark@archant.co.uk

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