Family incomes finally poised for a rise?

family income boost

family income boostFamilies are set to receive a long-awaited boost to their finances in the new year, according to researchers.

In 2013 households will enjoy their first real increase in income since the credit crunch first hit back in 2008, the Centre for Economics and Business Research (CEBR) has predicted.

Poorer families' income boost

And the good news is that the experts believe poorer and middle-income families will benefit the most.

They say inflation will ease and the economy will start growing once again, providing a double boost to hard-pressed families who are struggling after the long downturn.

In every year since 2008 low and middle-earners have seen their incomes fall in real terms.

That trend is set to continue in 2012 with an expected 0.2% fall in incomes because wages are increasing slowly and the cost of living is high.

UK economy 'set to grow'

However, the CEBR thinks that the economy will grow by 0.5% next year, with poorer families seeing a 1.5% increase in real incomes.

According to the figures, the real incomes of middle-income families will increase by 1% next year and the richest will see a 0.7% increase.

The CEBR believes there will be similar rises in 2014 and 2015 too.

Although the richest people in the country are set to benefit from a 5p tax cut that is due in April next year, the CEBR thinks they will nevertheless have slower income growth because some tax allowances are being reduced and also high salaries and bonuses are not expected to go up significantly.

Retail boost

As families enjoy the slight boost to their finances and have more money to spend there should also be a much-needed knock-on effect for the retail sector.

Retail sales volumes will increase by 2.5% over the year to mid-2013, the CEBR predicts, which is an improvement on the small 1.1% rise seen over the past year.

"There is finally a glimmer of light at the end of the tunnel for retailers, after four barren years," said CEBR economist Daniel Solomon.

However, he did add a note of caution: "Conditions will still be tough, just slightly easier than before."