The British are likely to have experienced in a few years the worst drop in the standard of living since “at least the 1950s”, estimated Wednesday in a study by the think tank Resolution Foundation. The most modest families “should experience (in the coming months) further declines in income, due to the rise in taxes, the end of aid to the cost of living and the increase in the cost of housing” , the organization said in a statement.
The Bank of England’s rate hikes to calm inflation, in particular, have not finished producing effects on households, in particular by causing monthly mortgage payments to soar, continues the think tank. But while the worst of the cost of living crisis may have passed, with inflation falling and average incomes now “rising faster than prices”, that is not enough to reverse the trend, the statement says. . “The current legislature is on track to be by far the worst in terms of changes in living standards since at least the 1950s” while the income of a typical working-age household “is expected to be 4% lower for the 2024-2025 fiscal year to what they were five years earlier, according to the foundation.
With legislative elections due by early 2025 approaching, this could put the ruling Conservatives in trouble, as “since the 1960s there has been no example of a government retaining its majority” with such a low income trend, notes the Resolution Foundation. But the rate hikes do not weigh negatively for everyone: households with savings, especially the oldest, will on the contrary benefit from a “huge savings boom” due to more attractive remuneration, according to the report. ‘study.
In a separate publication on Wednesday, the British Chambers of Commerce (BCC) said the UK economy remained on track to avoid a 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 “will still look like (a recession) for most individuals and businesses”, assured Vicky Pryce, of the Council economic advisory of the BCC, quoted in a press release.
