'Painful' years ahead, think tanks warn, as living standards set to fall

Key Points:

• Economic think tanks, including the Resolution Foundation and the Institute for Fiscal Studies (IFS), warn that UK households face a "painful" and "depressing" period ahead, with disposable incomes expected to fall by £1,050 (3%) between now and 2029, marking the worst decade for income growth on record.
• The Office for Budget Responsibility (OBR) attributes the grim economic outlook to higher borrowing costs and inflation driven by global conflicts such as the US-Iran war, forecasting a slowdown in GDP growth and higher inflation rates through 2027.
• Chancellor John Healey's recent Budget offers some financial relief measures, including a £100 support payment to ease energy costs, but experts argue these are insufficient to offset rising bills, particularly for poorer households.
• The Resolution Foundation highlights a stark divide in the current parliamentary term, with early years showing growth and improved living standards, but the latter half expected to be economically challenging with minimal income gains after taxes and housing costs.
• The IFS stresses that temporary cost of living support is inadequate without stronger economic growth, warning of tight government spending plans and the risk of increased borrowing if economic conditions do not improve.