The Squeezed Middle: here to stay?

Millions of low to middle income working families will have to wait until 2020 to see earnings return to pre-recession levels.

That’s the gloomy forecast found in a Resolution Foundation (www.resolutionfoundation.org) report out today.

The think tank – which inspired Ed Miliband’s repeated use of the phrase “squeezed middle” – has put some flesh on a term many have criticized as cloudy and vague.

Defining the squeezed middle as those “in work, but below middle income” (more than 10 million adults) the authors believe this group will be “struggling to keep its head above water for some years to come.”

Using the latest sluggish growth forecasts, the researchers found that the average annual disposable income of the squeezed middle would be £20,200 in 2020 – around £1,700 less than in 2007.

Even with growth in the economy, the incomes of the low to middle income group will rise more slowly than the rich, and its spending power will continue to be subdued by fast-rising fuel and food costs.

Plenty have attacked Miliband’s use of the phrase squeezed middle for being too vague to be meaningful, but that is exactly what makes it work so well. Almost everyone with a job feels they belong to the hard-working but hard done-by category.

When pushed early last year by Conservatives to say who was and who was not in his precious demographic, Miliband answered: “Not those on benefits, not those on six-figure salaries, but the broad middle class who find themselves financially hard-pressed.”

It’s certainly better than Nick Clegg’s “alarm-clock Britain” (remember that one?), and now there’s some impressive research to back it up. Gathering traction over the last six months, the Oxford English Dictionary even picked squeezed middle as its ‘word of the year’ at the end of 2011.

Buzz terms tend to come and go, however, even if straightened financial circumstances are here to stay. Will we still be talking about the squeezed middle in five years time?

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The fight over who speaks for the squeezed middle has some way to go, as does the battle over who credibly can claim to have a vision for “responsible capitalism” among those at the top.

Mr Miliband - desperate the Prime Minister does not don the mantle of City reformer - said today that Royal Bank of Scotland boss Stephen Hester should most certainly not be getting a reported £1.5million bonus. Over to you, Mr Cameron.