Recession? What recession?

I participated in a round table for the Financial Times held at the wonderful Library of Mistakes last week (if you haven’t visited this yet, go now!). You can read the transcript here.

At one point in our discussion, we talk about the impact the recession has had on income and finances across the UK. Anne Richards of Aberdeen Asset Management said that the odd thing about the recent economic recovery is that “it’s felt to many people like it has never come.” I challenged that.

It seems to me, I said, that for many people it is not that they haven’t seen a recovery, but that, as far as their income goes, they have “never felt a recession”. Anne said that she “fundamentally disagreed” with me on this matter, and some readers felt the same. Several people on Twitter and in the comments under the roundtable asked “what planet” I live on.

The same one as the ONS as it turns out. Go here to the Annual Survey of Hours and Earnings for 2014 and scroll down to Figure 2.

The ONS has produced a chart (you can see the original here – go to to the Annual Survey of Hours and Earnings for 2014 and scroll down to Figure 2).  The chart shows how the earnings of those in full time continuous employment have pretty consistently risen by more than inflation (2011 is the only exception).

UK annual earnings chart

Source: Office for National Statistics

In 2014, they rose at a rate of over 4%, suggesting that in inflation adjusted terms those in continuous employment saw a real rise in income of around 2% last year alone.

There are rather a lot of these people. Being in consistent employment is defined as having been in a job for a year or more from the survey date. 82% of the full-time UK workforce in their sample had been in their job for a year or more from the last survey date. Yes, 82%.

Now imagine that you are one of these 82% of full-time workers. You’ve seen regular rises in your inflation-adjusted income. Yet at the same time the interest rate you pay on your mortgage, car loans and the like has utterly collapsed. Have you just felt a terrible recession? Or have things really been pretty good? Quite.