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Richer, happier and better paid - but Britons still think the country is getting worse

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The average family has more disposable income and is increasingly happy - but fears over the economy are growing despite their own experience Credit: Dominic Lipinski/PA

Families are becoming better off as ultra-low unemployment and rising wages boost their finances, but people are growing more pessimistic about the economy, fresh statistics suggest.

Happiness, satisfaction and the feeling that the things done in life are worthwhile are on the rise, according to the Office for National Statistics.

However, even as individuals feel better and more prosperous on average, there is simultaneously a widespread conviction that the wider economy is worsening.

Worries about rising unemployment are at a six-year high. Expectations of the economy’s performance over the next year have not been this gloomy since 2011.

Prices are also a concern. Inflation is currently at 2pc, in line with the Bank of England’s target. However a separate survey from Wall Street bank Citi showed households expect this to rise to 2.8pc over the next year and 3.4pc annually in five to 10 years’ time, the highest long-term expectation since 2013.

Deteriorating perceptions of the economy and of future living standards are important because consumer spending has been the driving force behind the economy’s strength in recent years.

Even as business investment has contracted, household confidence has stayed strong, reinforcing growth and hiring in a positive cycle.

Analysts expect this to continue as unemployment remains very low at 3.8pc, a level not seen since the mid-1970s.

"While people’s perception of the economic outlook may have a bearing on how they vote, it’s how they view their own financial situation which is far more important to spending decisions. And there doesn’t seem to be many cross-currents between the two," said Martin Beck at Oxford Economics.

"Intuitively, personal circumstances are likely to be a more important driver of households’ willingness to spend than the rather nebulous concept of the ‘economy’."

Real household disposable income per head, after accounting for benefits and Government services, rose to £5,140 in the first quarter of this year, up 1.3pc on the year and up almost 5pc from its level at the start of 2008 when the ONS started this series of 'wellbeing' data.

Financial wealth per head rose almost 3pc on the year to an average of £72,482, a new record.

Meanwhile self-reported happiness, out of a possible 10, rose to 7.56 on average, continuing the steady rise from 7.29 when the survey began in 2012.

Scores for satisfaction and a worthwhile life have followed the same pattern.

Meanwhile income inequality has edged down a touch, and the number of people feeling particularly anxious have also modestly declined.