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UK tumbles seven places in table of household income

Household incomes in the UK fell behind Australia and France in the financial downturn as the country tumbled down the rankings comparing major economies.

The UK fell from fifth to 12th place between 2005 and 2011 in a table of 30 states belonging to the Organisation for Economic Co-operation and Development (OECD), the Office for National Statistics (ONS) said.

Its decline was partly attributed to the drop in the value of the pound, meaning that while income has grown, this spending power did not stretch as far when compared to other countries.

ONS data showed that the UK had shot up the table of the most indebted countries in Europe between 2000 and 2011, as it doubled the amount it owed in relation to gross domestic product (GDP).

It also showed that since 2009, inflation has remained high compared to the US, France and Germany.

The table of disposable income per head showed the UK had fallen substantially in the rankings while other countries maintained a relatively stable position.

The US, Luxembourg, Norway and Germany remained unmoved at the top of the chart while Switzerland took the UK's place as it also fell behind Austria, Canada, Belgium and Sweden.

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The rankings use a measure designed to reflect money in pockets after deductions such as income tax or pension contributions.

They are adjusted to take into account whether services such as education and health are provided for free as in the UK.

The ONS said that until 2010, the UK had seen a "prolonged period of growth" in this measure of income, despite the recession of 2008-2009, with low mortgage rates and a relatively strong labour market holding off the effects for a couple of years before households "began to feel the squeeze".

It said the slip in the table from fifth to 12th "highlights the relative experience of UK households since the recession".

The measure is adjusted to reflect purchasing power.

The ONS said: "Between 2005 and 2011 the prices of goods and services in the UK has increased relative to other countries.

"As a result, although household income in the UK has grown, when compared to other countries that income doesn't stretch as far.

"This goes some way to explaining why the UK ranks relatively lower than it did in 2005."

Meanwhile, the UK fell 12 places down from ninth best performer in a table measuring unemployment, though its jobless rate of 8% in 2011 was well below crisis-hit Greece (17.7%) and Spain (21.6%).

But the ONS said the UK labour market was relatively resilient and that many countries that overtook it were smaller economies less exposed to the downturn.

Figures also showed gross public sector debt as a percentage of GDP rose from 41.1% in 2000, well below that of the euro area's 69.2%, to 85% in 2011 – compared to 88.1% in the eurozone, moving the UK from 15th most indebted OECD country in 2000 to seventh in 2011, out of 22 nations.