Two separate indicators of consumer confidence show that people are not feeling the full benefits of the UK’s economic recovery.
Accountancy group EY said real take-home pay would not return to pre-crisis levels until 2017 and that the ‘squeezed middle’ and the young were worst affected.
In a report the EY ITEM Club, a respected group of economists, said households were facing a “lost decade” of wage growth meaning consumer spending would stay below historic levels.
It also means consumer-facing businesses are facing a challenging trading environment, it said.
Martin Beck, senior economic advisor to the EY ITEM Club, said: “Total household incomes have strengthened because more people are in work but individuals do not have extra money in their pockets.
“Real wages are being held back by strong growth in the supply of workers and the fact that firms are facing increased non-wage costs, such as new pension schemes.”
Meanwhile a barometer of consumer confidence by GfK showed sentiment falling in September to a net score of minus one, from plus one in August.
Over the last 12 months confidence was still up eight points, however, despite concerns among respondents about their personal financial situation and the strength of the economy generally.
“Many people are not themselves feeling any better off despite the growth in GDP, and this may be tempering the impact of positive media coverage of the economy,” said Nick Moon at GfK.More on this story