Benefits from parts of economy that are performing strongly are not being felt by all

This article is more than 1 year old

This article is more than 1 year old

British households have grown more pessimistic about the state of the economy and their own personal finances, according to official figures, amid rising debt levels and faster income growth for the richest in society.

Pulling together an assessment of personal and economic wellbeing data for the first time, the Office for National Statistics said the benefits from parts of the British economy that were performing strongly were not being felt by all.

Despite unemployment being at the lowest level since the mid-1970s and the return of real growth in household disposable income, measurements of personal wellbeing were in stagnation, while people’s perception of the future were worsening.

According to the ONS, household debt per head stood at 133% of income in the third quarter of 2018, reflecting how families have slipped further into the red to maintain their spending as living costs rise.

Spending by UK households surged to a 13-year high in the year ending March 2018 as rising transport and housing costs, and higher food bills took their toll, according to official figures published last week.

Glenn Everett, the head of inequalities at the ONS, said: “Despite high levels of employment, rising incomes and spending across UK households, people are not reporting increases in their wellbeing.

“This may be due to worries about rising debt repayments, which could be driving concerns about their future financial situation.”

The ONS also said that between 2011 and 2016 average income for the bottom fifth of households increased by 4.8%, while it rose at a faster rate of 6.7% for the richest fifth in Britain.

It also found that households living in social-rented accommodation received 50% of their income from cash benefits, which have risen only slowly, while households that own their home outright receive a larger proportion of income from pensions, which have risen more strongly.

John McDonnell, the shadow chancellor, argued that the data showed the “unequal nature of the economy under the Tories”.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

He said: “This should come as a wake-up call to a complacent and out-of-touch government recklessly heading towards a catastrophic no-deal Brexit while households are having to go into the red to get by.”

Household spending has risen since the middle of 2016, helped by all-time-high debt levels, although income levels have remained flat, the ONS said. It added that this was reflected in flatter life satisfaction, happiness and worthwhile ratings in the UK.

Although the Whitehall statisticians did not draw a direct link with the EU referendum, the figures reflect the period since the Brexit vote, which economists have said hit the standard of living across the country.