Households' living standards are rising at the slowest pace in over 50 years, as rapid immigration drives population growth while the economy stagnates. 

New data from the Office for National Statistics (ONS) reveals that real GDP per head, a key indicator of living standards, is growing at the slowest rate in decades—averaging just 0.3% annually so far in the 2020s. This is the lowest growth rate since at least the 1970s.

The slowdown in GDP per head is due to population growth outpacing economic expansion. Net migration added 1.5 million people in 2022 and 2023. While the economy grew by 4.3% in 2022, the growth rate fell to just 0.3% last year.

The economy has not kept pace as a result of a worklessness crisis and persistent problems with productivity. The number of people out of work from sickness has surged to a near-record high of 2.8m, fuelling fears of a spiralling benefit bill.

The ONS said: “Long-term sickness, ageing of the resident population and net migration for reasons other than work each may have been factors that contributed to a higher population outside of the labour force.”

Even as living standards have, on average, increased in the 2020s, GDP per head remained below pre-pandemic levels at the end of June following an in-year slump.

GDP per head suffered a dramatic drop during Covid before recovering only weakly, leaving it vulnerable to falling below pre-pandemic levels.

The ONS’s findings suggest economic growth is being fuelled by more people arriving, not because of improvements in productivity. It means there is little more to go around on a per-household basis than before the pandemic.

The findings come as immigration once again becomes a top concern for voters, with 45pc of Britons saying it is among the most important issues facing the country.

Sentiment is now on a par with just after the EU referendum in 2016 and means immigration is the second-most cited concern after the economy.

Worries about immigration had been in decline since Brexit and only started rising consistently again from autumn 2022.

The war in Ukraine and Hong Kongers fleeing tightening security laws resulted in around 210,000 people arriving on humanitarian visas in the past two years.

The surge in immigration has come as women in Britain have fewer children than at any point since the 1970s. Migration has become the main source of population growth as a result.

Migrants appear to have higher employment rates than the population as a whole, the ONS said.

It added: “Continued improvement in employment prospects for non-EU born residents in the UK may further contribute to increasing real GDP per head.”