Average family income has fallen by £365

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THE average British household has seen its real-terms income fall by £365 in the worst three-year squeeze since the early 1980s, research has suggested.

The Institute for Fiscal Studies (IFS) found that the income of the average UK household had fallen 1.6 per cent since 2008.

During the previous half-century, the average income rose by 1.6 per cent each year.

The IFS study for the BBC also suggested that those among the poorest 10 per cent saw real incomes fall by 2.1 per cent between 2008 and 2011, a drop of £182 per year.

But the richest households fared worse, with those in the top five per cent of the income scale seeing a fall of 3.8 per cent over the three years, equivalent to an annual decline of £2,230.

Families with children saw average income fall by 1.1 per cent, or £233 a year.

They would usually have expected income to rise by £1,060 a year.

People have been hit by earnings failing to keep pace with inflation and low interest rates. The think-tank’s director, Paul Johnson, said it is likely to be 2013 until incomes start rising.