It’s been pretty gloomy since building society Northern Rock hit the buffers in 2008.

The bank’s collapse was one of the first signs of a crisis which hit major financial businesses across the world.

And we’ve been living with the effects ever since.

For many people, it meant a fall in living standards. Wages were frozen or cut – either in real terms (ie after the impact of inflation) or, even worse, in simple cash terms.

We got poorer.

But here’s the good news.

At last, incomes have returned to the days before the banking crisis, according to the Office for National Statistics.

In fact, they’re a bit higher.

The UK enjoyed a period of uninterrupted economic growth between 1992 and 2008. It began to feel like we were doing pretty well.

Well now, we’re actually a little richer than we were in those days.

The UK median disposable household income was £27,300 in the financial year ending in 2017, up by 2.3 per cent on the previous year after taking inflation into account.

UK median disposable income


UK median disposable income

Total income, including wages, pensions, benefits and any money from investments, after direct taxes have been paid

Disposable in this case means total income – including wages, pensions, benefits and any money from investments – after direct taxes such as income tax, national insurance or council tax have been paid.

After taking account of inflation and changes in household structure, UK median disposable income has increased by £600 (or 2.3 per cent) since the previous financial year, and is £1,600 higher than it was before the economic downturn in 2008.

And while incomes have grown for every part of society, it’s the least wealthy that have benefited most.

In fact, incomes for the richest fifth of households have only just returned to the level they were at before the banking crisis (in real terms) – but poorer households are £1,800 better off, in real terms.

And inequality has fallen over the past ten years, although only by a small amount.

Glenn Everett, of the Office for National Statistics, said: “Households have more disposable income than at any time previously.

“However, compared with their pre-downturn levels the incomes of the poorest households have risen nearly £2,000 but the incomes of the richest are only now slightly higher. Overall, income inequality has slowly fallen over the past decade.”

It’s a dramatic change in fortunes for many people, because disposable income fell significantly for a period.

The UK’s economic output shrank between 2008 and 2010. And although there was a delay before many of us felt the effects, it meant that median household income fell by 4.5 per cent between 2010 and 2013.

But now, incomes have not only risen back to where they were but are actually higher.

This is largely because of “an increase in the average income from employment, reflecting increases in both the wages and employment levels of people living in these households,” according to the Office for National Statistics.

And it’s the less wealthy that have seen the biggest increase.

The average income of the richest fifth of the population is up by £200 a year, compared to before the banking crisis.

But the average income of the poorest fifth has risen by £1,800.

Disposable income increase since 2008


The richest


The least wealthy

Taking into account inflation

It means inequality - the gap between the rich and the poor - has fallen. But there’s still a massive divide.

The average disposable income for households in the richest fifth of the population is £65,542 a year.

But for those in the bottom fifth, it’s £12,748.

As mentioned earlier, disposable income takes into account the effect of direct taxes, and of benefits.

If you ignore those then the gap is even bigger. That’s because taxes cut the income of the rich, while benefits increase the income of the poor.

The richest fifth of households paid on average £21,400 in direct taxes in the year up to 2017, and most of this was income tax. This comes to 23.2 per cent of their gross income.

The average direct tax bill for the poorest fifth of households was £1,900, and most of this was Council Tax. This was equivalent to 12.7 per cent of gross household income for this group.

The median disposable income for retired households is £22,300 while the income of non-retired households is £29,900.

Disposable income for retired households


Retired people



Office for National Statistics

The gap closed slightly after the banking crisis, but now it’s growing again. In other words, retired households are falling further behind.

In the year up to 2017, disposable income for non-retired households rose by 3.5 per cent while for retired households it rose by 1.2 per cent.

That suggests claims the elderly are raking it in at the expense of younger generations cannot be entirely true.