As usual, there was some very interesting stuff in the Institute for Fiscal Studies review of the Autumn Statement. This chart by Andrew Hood caught my eye.
The over-60s escaped the post-recession income stagnation. On average, they have done rather well since 2007. It’s a similar story with wealth, as Andy Haldane pointed out in June.
For many of those over the state pension age, the recession was something they witnessed second hand, either through the media or by talking to younger relatives.
What does the IFS think will happen over the next few years? Well with pay stagnation, benefit cuts and inflation, things are looking worse than they were in March. The IFS reckons that, in real terms, average earnings won’t get back to pre-recession level before the end of the decade. State pensions, though, will continue to rise.
The upshot of all this is, as the Resolution Foundation says, a serious downgrade to the forecast for household incomes. The difference between the March and November forecasts (the blue and red lines on this chart) shows the impact of the economic slowdown. A third of households will find themselves worse off than they are now.
As Conor D’Arcy says, the last time we saw a pay squeeze like this was in the 1810s.
The likely impact of Brexit, then, will be more of the same. Stagnant or falling incomes for those in work with relative protection for those on pensions. Five years from now, the charts showing income and wealth by age will probably look very similar.
This graph by Oxford demographer Maja Založnik displays, for each age group, the percentage of the vote and the turnout in the EU referendum. Remain voters are in yellow, Leave voters in blue, registered voters who didn’t vote in light grey and unregistered voters in dark grey.
It shows clearly how big a role the over-65s played in swinging the vote to leave. She points out that, had the vote been weighted by remaining life expectancy, the result would have gone the other way, as the votes of those with longer to live would have counted for more.
Many of those who voted Leave won’t have to live with the long-term consequences of Britain’s exit from the EU. Thanks to the relative insulation of pensions and pensioner benefits from the economic fallout, they won’t feel many of the short-term consequences either.
As John Harris remarked recently, in British politics, older politicians and voters are now calling the shots:
In both main parties, the former dominance of a clique of self-styled “modernisers” has been avenged, and politics is about a new emphasis on age, experience and supposedly traditional values.
In contrast to the excitable 40-somethings of the recent past, Theresa May and Jeremy Corbyn are 60 and 67 respectively. Besides leaving the EU, her flagship policy is the return of grammar schools; his, as far as I can tell, is the renationalisation of the railways. There may be occasional signs of interest in things more relevant to the 21st century (even if they have yet to cohere into a convincing vision, witness some of the recent pronouncements by the shadow chancellor John McDonnell). But the mainstream too often seems to be carved up between two conservative parties, led by people who are neither intellectually curious nor shaped by the great technological convulsions that have defined the past 25 years.
The electorate is growing older, and politics is clearly being reoriented accordingly.
On the day of the Autumn Statement there was a pro-Brexit demonstration. The chap in the middle here asks, “Who really runs this country?” If the income and wealth stats are anything to go by, the answer to that is pretty clear.