Are Britons really poorer than they were 20 years ago, or does it just feel that way?

Millions of UK households are facing what’s been dubbed “awful April”^[1] after rising council tax, water bills and broadband costs coincided with the new tax year. It could all start to hurt quite quickly. And it has led many people to ponder whether they’re genuinely worse off than previous generations – or simply experiencing a temporary pinch.

Council tax has risen by an average of 5% across England^[2] (some rises in Scotland and Wales are even greater). Water bills are up by £10 per month on average^[3], while many broadband and mobile^[4] providers have imposed rises several percentage points above the rate of inflation.

This comes after years of economic volatility, from the 2008 financial crisis through Brexit, the COVID pandemic and the subsequent inflation surge^[5].

But beyond the immediate pain of these April increases, there’s a deeper question. Has there been a fundamental shift in British prosperity over the past two decades?

Data from^[6] the UK’s Office for National Statistics (ONS) reveals a complex picture around real household disposable income (RHDI). This is the amount of money from all income that households have available for spending or saving after taxes and benefits, adjusted for inflation. As such, it’s a reliable way to see how much money people have to spend right now, compared to previous years or decades.

Between 2000 and 2008, RHDI grew steadily^[7] at approximately 3% per year. The financial crisis brought this growth to an abrupt halt, with the period between 2008 and 2023 characterised by unprecedented stagnation^[8].

While there have been periods of modest recovery in 2023 and 2024, the overall trajectory shows sustained minimal growth^[9] in disposable income ever since the 2008 financial crisis.

When broken down by income groups, the data tell a more nuanced story. The bottom 20% of households have experienced virtually no growth^[10] in real disposable income since 2008, while the top 20% recovered more quickly after initial setbacks. Income inequality^[11], which narrowed slightly during the early 2010s, has widened again in recent years.

Underlying the income stagnation is Britain’s productivity problem. Labour productivity growth, which averaged around 2%^[12] annually in the five decades before 2008, has grown at less than 1% per year^[13] since. This has directly impacted wage growth.

Several factors contribute to this productivity puzzle – under-investment in infrastructure and skills, a shift toward service-sector jobs with traditionally lower productivity growth, and economic uncertainty discouraging business investment.

Perhaps the most significant factor in understanding why people might feel poorer is housing costs. The ratio^[14] of average house prices to average earnings has nearly doubled over the past 20 years. In 2002, a typical house cost around five times the average salary. But by 2023, this had risen to approximately nine times.

For renters, the situation is also very challenging. Private rental costs increased faster than wages^[15] in the year to January 2025 in most regions, particularly in London. The proportion of income spent on rent increased from roughly 25%^[16] to more than 30%^[17]) for the average renter between 2022 and 2024.

This housing cost burden creates a stark divide between generations. Those who bought property before the mid-2000s housing boom have generally seen their housing costs decline as a proportion of income as their mortgages were paid down. Meanwhile, younger generations face significantly higher barriers to home-ownership and higher ongoing costs.