The cost of recession: £11,000 per household

The average British household lost £11,000 as a result of the most brutal recession for more than a generation, official figures revealed yesterday.

The figures, in a report from the Office for National Statistics, showed household wealth hit a high of £128,000 in 2007 but stood at £117,000 at the end of 2009, largely as a result of falling house prices.

Gross domestic product per person plunged by 5.5 per cent between 2008 and 2009 – the largest annual percentage fall in any year since 1949, and a stark illustration of the scale of the contraction in the UK.

The downturn, triggered by an international banking crisis which, according to some estimates, led the Government to spend as much as £1 trillion propping up the sector, lasted for six quarters and did not end until late last year.

It cut 6 per cent from Britain's economy and resulted in the loss of 600,000 jobs, making it the deepest downturn since records began in the early 1950s. Net wealth actually rose 7.3 per cent in 2009 compared with the low point hit in 2008, although the recent string of negative data about the housing market suggests that it could easily start to fall again.

The report said that at its nadir in 2008, real household wealth in the United Kingdom had fallen to its lowest level since 2003, "reflecting the effects of the recession".

Despite the fall in wealth and GDP during the downturn, household income in 2009 increased by 1.2 per cent – as it has since the 1980s regardless of whether the economy was growing or in recession.

The Office for National Statistics (ONS) said this was largely a result of the historically low levels of interest rates. Although the Bank of England's Monetary Policy Committee is not expected to raise rates imminently, signs of division have emerged among its members.

Andrew Sentance has been arguing for an increase while others have called for more "quantitative easing", colloquially likened to printing money; they say this is the best way to further stimulate an economy which is likely to be shaken by the forthcoming spending cuts, which some fear could cost 500,000 jobs and send Britain into a second downturn.

Total household debt as a percentage of disposable household income fell to 161 per cent in 2009 from 169 per cent a year earlier, according the figures from the ONS.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'