Q: To what extent will UK households see, and feel, an improvement in their household finances and standard of living next year?

John Van Reenen, Centre for Economic Performance at the London School of Economics and Political Science
If productivity growth recovers the average incomes should follow as this has been the historical trend. There has not been a serious decoupling between average hourly compensation growth and GDP per hour (productivity) growth. See.
A risk to this is that most other countries have seen a larger fall of worker’s share of GDP than the UK over the last 20 years. Were we to follow (say) the US pattern, our situation will be less rosy. The main economic issue facing the UK is whether productivity growth will recover. I am optimistic on this front as I believe a significant fraction was cyclically related. But if this does not recover then neither will compensation. Finally, people may not feel this even as it happens. First, compensation includes non-wage benefits like pension contributions which will need to rise. Second, rising inequality implies that the average will outstrip the median.

Sir Christopher Pissarides, Regius Professor of Economics, LSE and Associate of the Macro Programme at the Centre for Economic Performance
The growth that I expect will benefit households as a whole but high incomes will probably benefit more than low incomes. So although households across the income distribution will feel an improvement in living standards wealthier households will see more improvement.

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