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.
“This parliament is increasingly looking like one of two halves,” said the think tank’s chief executive, Ruth Curtice.
“The first half has been marked by rising living standards, solid economic growth and extra funding for public services,” she said.
However, the second half of the parliament would be “tough going”, she said.
