Economic research organizations warn that typical working-age families will lose £1,050 in disposable income by 2029 as national economic momentum falters. Official forecasts show gross domestic product growth will slide to 1% in 2027 while projected inflation climbs to 3.4%. While Chancellor John Healey defended his budget by arguing it offers vital breathing room, analysts caution that tight state expenditure plans will threaten public service delivery.
Key points
Living standards across all UK households are projected to increase by less than 0.1% ann…: Living standards across all UK households are projected to increase by less than 0.1% annually through the end of the decade.
Frozen tax thresholds combined with elevated borrowing costs stemming from foreign wars w…: Frozen tax thresholds combined with elevated borrowing costs stemming from foreign wars will continue to heavily constrain household budgets.
Analysts characterized the government's £100 energy relief as an ineffective scattergun m…: Analysts characterized the government's £100 energy relief as an ineffective scattergun measure that leaves households facing higher bills than in 2022.
Sources checked by our analysis pipeline: 1
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People are facing a "painful" and "depressing" few years ahead, economic think tanks have warned, after forecasts showed growth in living standards grinding almost to a halt.
Typical working-age households would see their disposable income fall by £1,050, or 3%, between now and 2029, according to the Resolution Foundation, while the Institute for Fiscal Studies (IFS) said the current decade would be the worst for household income growth on record.
Chancellor John Healey said his Budget offered "breathing space", but said the government could "never remove completely" cost of living pressures.
The UK's official forecaster said its latest economic forecast painted a "pretty grim picture".
The Office for Budget Responsibility (OBR), blamed the difficult financial situation facing the UK on higher borrowing costs and inflation caused by the US-Iran war.
In response to rising energy prices, Healey has announced measures, including a £100 support payment, aimed at easing pressure on household finances.
But that would not be enough to offset the impact of higher energy bills, the Resolution Foundation said.
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