The economy is £300bn (16%) smaller than it would have been if the financial crisis hadn’t happened, according to research from the Institute for Fiscal Studies (IFS).
Wages could be approximately £3,500 higher per year than they are today based on rates of growth seen before the crisis, and GDP per capita is currently £5,900 lower per person than it annually could have been, the policy research institute revealed.
Millennials – those in their 20s and 30s – have been the worst hit, with median earnings respectively 5% and 7% lower than in 2008.
IFS director Paul Johnson and senior research economist Jonathan Cribb pointed out that, while the economy has been growing for eight years, it has been growing slowly by historic standards.
They warned that public debt is double its pre-crisis level relative to the size of the economy.
“We should never stop reminding ourselves just what an astonishing decade we have just lived through, and continue to live through,” they said in the report.
“The UK economy has broken record after record, and not generally in a good way: record low earnings growth, record low interest rates, record low productivity growth, record public borrowing followed by record cuts in public spending.”
However, the IFS pointed out that there has been strong employment growth, with 2.7 million more people in paid work compared with a decade ago.
Median real household income has also risen from £24,300 to £25,700, but it could have been at £29,900.
Meanwhile, overall government debt is now 50% of GDP higher than it was pre-crisis, meaning it is approximately “£1trn higher” than it was a decade ago.