Overall, those in the middle today have been remarkably resilient in changing their spending habits to suit their means. But how will they cope when interest rates finally rise?
That’s the big question at the heart of a latest report by cross-party think tank the Social Market Foundation.
The report, Riders on the Storm: Britain’s middle income households since 2007 launched during an evening event held on Monday 7 April, revealed that families in the “squeezed middle” were particularly good at changing their behaviour when put under economic pressure.
To understand how they coped during the economic downturn, the SMF tracked middle income households back from 2011-12 to 2007-08. This was only possible because of the longitudinal nature of Understanding Society, which tracks data from the same households over time.
It looked at households with total pre-tax and benefits income of £26,100 – £41,200 pa in 2011-12 and identifies changes in income, employment, happiness and satisfaction, as well as how they have adapted to costs such as childcare.
Using new analysis gained through Understanding Society/BHPS, the SMF was able to report the following:
- Food: the middle have managed food spending during the recession to avoid the 25% increase in food prices over the period
- Childcare: the middle are using 20% more free childcare than 2007-08 for children aged under two, relying on the generosity of grandparents rather than paying someone else
- Housing: over half of middle income households own a home with a mortgage so low interest rates have helped keep housing costs down among the large number of home-owners in the middle.
SMF Director, Emran Mian said:
“While analysis of statistical averages is important, an ‘average’ family only exists on a spread sheet. This unique research undertaken by the SMF reveals real families change their behaviour when put under economic pressure. We expect them to continue to show resilience and adaptability and perhaps the best policy is for policy makers to help them continue to help themselves.”
- The Daily Mail: Middle income families have thrived since the crash
- The Daily Mail: How middle classes beat the downturn
- New Statesman: The middle hasn’t been squeezed as much as you think
- Channel 4 News: FactCheck Q&A: Squeezed middle or smacked bottom?
this news has been re-posted from the Understanding Society website