'Painful' years head, think tanks warn, as living standards set to fall
Summary
UK economic forecasts point to weak growth in household living standards through the end of the decade. Think tanks say incomes will barely rise, while higher inflation and energy costs will add pressure despite government support payments.Key Facts
- The Resolution Foundation forecasts disposable income for typical working-age households will fall by £1,050, or 3%, between now and 2029.
- The Institute for Fiscal Studies says the current decade is on track to be the worst on record for household income growth.
- The Office for Budget Responsibility forecasts UK GDP growth slowing from 1.2% in 2026 to 1% in 2027.
- The OBR raised its 2027 inflation forecast from 2% to 3.4%, citing pressures including higher borrowing costs and energy prices linked to the US-Iran war.
- The government announced a £100 payment to help with rising energy costs, but the Resolution Foundation says it will not fully offset higher bills.
- The OBR projects living standards across all households will grow by less than 0.1% per year by the end of the decade.
- Frozen tax thresholds are reducing the take-home pay people keep from their income.
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