The 2008 crisis divided Britain into two economic classes -- retirees and everyone else

The stereotype of retirement is that you downsize, learn to live on a fixed income, and reign in your expenses as income from work disappears.

But since the 2008 financial crisis, it is workers in Britain who have fallen behind and pensioners who have become wealthier.

One way to think about inequality in Britain today is that retirees and workers are now on two different economic tracks:

The result is that Britain now looks like a counterintuitive mirror of the stereotype: It is the workers whose incomes are flat and pensioners who enjoy annual raises.

The big change happened in the last recession.

The 2008 crisis knocked the UK economy off an income growth track from which it has not recovered. If the 2008 crisis had not happened, average incomes in Britain would be 20% higher now than they were that year, according to new data from the Institute for Fiscal Studies. Instead, they are only about 5% higher.

Projected to 2021-2022, the IFS says, the lost growth will have cost workers £5,900 per year for a childless couple and £8,300 for a couple with children.

But pensioners lost very little.

The IFS data add to a pile of research which suggests Britain is sharply divided between those who have defined benefit pensions and those who do not; and those who own property and those who do not.

The UK’s historic economic trajectory was derailed by the 2008 crisis, and before-housing cost incomes (BHC) haven’t recovered:

This chart shows the same data with more detail on the last few years:

Since the crisis, incomes for pensioners have continued to rise but workers’ incomes have barely recovered.

The result, as this chart of after-housing cost incomes (AHC) shows, is that 30% of children are in poverty, the general poverty rate is about 22%, but fewer than 15% of pensioners are in poverty.

NOW WATCH: Despite the negative stigma, payday loans are not much different from credit cards

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.