Household incomes are likely to stagnate or decline next year, according to new research from the Resolution Foundation, as Britain’s cost-of-living challenges continue.
While Chancellor Rachel Reeves has promised to improve public services, the leading thinktank says this “tax-rise gamble” risks leaving many people worse off in purely financial terms.
Researchers at the Resolution Foundation devised a measure of “real living standards”, combining disposable income with the benefits gained from public services. Its analysis revealed that the poorest 10 per cent of households could see their disposable income drop by 2 per cent, though improvements in services should leave them £28 better off overall. By contrast, higher earners may experience a 0.4 per cent real-terms reduction, equating to a cash hit of about £140 once the value of public services is taken into account.
Mike Brewer, the thinktank’s interim chief executive, explained: “The Budget tax-rise gamble is that, while people may not be better off in purely financial terms, they will feel better off if we can have better, less dysfunctional public services.”
However, significant challenges remain at both ends of the income scale. The poorest are grappling with higher council tax bills, rising housing costs and real-terms cuts to social security payments. Better-off households, meanwhile, typically rely less on state-provided services and see few gains from minimum wage increases.
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