The British are at risk of experiencing within a few years the worst decline in their living standards since “at least the 1950s”according to a study published today by the think-tank Resolution Foundation.
Families with the lowest income level “are expected to experience (in the coming months) further reducing their income due to rising taxes, the end of financial aid for the cost of living and rising housing costs,” the think-tank said.
The impact on households from the Bank of England’s interest rate hikes in a bid to tame inflation continues, sending monthly mortgage payments skyrocketing, the study says.
However, while the worst of the cost of living crisis may be over, with inflation easing and median incomes “now rising faster than prices”, this is not enough to reverse the trend, it stressed.
“The current period is on track to be by far the worst in terms of changes in living standards since at least the 1950s”when the income of a typical working-age family “is expected to be 4% lower for the 2024-2025 fiscal period than it was five years earlier, according to the Resolution Foundation.
With parliamentary elections – scheduled for early 2025 – approaching, this could put the ruling Conservatives in a difficult position because “since the 1960s, there has been no example of a government retaining its majority” with such low income growth, notes the Resolution Foundation.
But rate hikes don’t have a crushing impact on everyone: households with savings, especially older ones, will instead benefit from a “huge savings boom” due to more attractive earnings, the study found.
In a separate release today, the British Chambers of Commerce said the UK economy remained on track to avoid recession, but added that this would make little difference to most Britons.
“With growth expected to be very close to zero for three years,” the economic context in the United Kingdom “it will still look like (a recession) for most individuals and businesses”pointed out Vicky Price, economic advisor of the Chamber.
Source: News Beast
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