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UK living standards set to stagnate for rest of 2020s, think tank says
Published by Global Banking & Finance Review®
Posted on June 25, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on June 25, 2025
2 min readLast updated: January 23, 2026
UK living standards are forecasted to stagnate through the 2020s, with poorer households facing income drops, according to a think tank report.
LONDON (Reuters) -Living standards in Britain look set to barely grow over the rest of the decade and poorer households are likely to suffer a drop, in part due to a welfare squeeze, according to a report published by a think tank on Thursday.
Median household incomes after taxes, benefits including pensions and housing costs are on course to rise by a total of just 1% more than inflation by the 2029/30 fiscal year, the Resolution Foundation said. Lower-income families are expected to see a 1% fall.
Typical households paying mortgages will see incomes fall by 1% as the impact of higher interest rates feeds through to more borrowers. By contrast, people who own their homes outright are set to see their incomes grow by 3%, the foundation said.
The biggest winners are likely to be pensioners with their incomes forecast to rise by 5%. Families with children are set to have no income growth.
Adam Corlett, principal economist at the think tank, said the forecasts could prove to be too gloomy if the economy grows more quickly than expected. Low-income households would benefit if the government scraps a two-child limit on some family benefits, he said.
The limit was introduced by the previous Conservative government. Prime Minister Keir Starmer is considering ditching it. However, he has said he will not reverse plans to make it harder for people to claim long-term sickness and disability benefits which have run into opposition within his Labour Party.
(Writing by William Schomberg; editing by David Milliken)
Median household incomes after taxes and benefits are expected to rise by just 1% more than inflation by the 2029/30 fiscal year.
Typical households paying mortgages are projected to see incomes fall by 1% as the impact of higher interest rates affects more borrowers.
Pensioners are forecasted to be the biggest winners, with their incomes expected to rise by 5%.
The forecasts could improve if the economy grows more quickly than expected, which would benefit low-income households.
Prime Minister Keir Starmer is contemplating removing the welfare limit introduced by the previous Conservative government.
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