Bleak Outlook: Britain's Living Standards Facing Stagnation

Britain's living standards are predicted to stagnate over the next decade, with poorer households expected to suffer a decline, as highlighted by a think tank report released on Thursday. The Resolution Foundation's analysis shows median household incomes, factoring in taxes, benefits, and housing costs, rising by only 1% more than inflation by the 2029/30 fiscal year. This modest gain masks a 1% income reduction for lower-income families.

Economic pressures from higher interest rates are impacting typical households with mortgages, expected to experience a 1% decrease in incomes. Meanwhile, homeowners are likely to see a 3% increase, with pensioners emerging as the biggest beneficiaries, potentially enjoying a 5% income rise. Families with children, on the other hand, are poised for stagnated income levels.

Principal economist Adam Corlett of the think tank suggests the forecast may appear pessimistic if economic growth surpasses current expectations. He advocates for policy shifts, such as removing the two-child benefit limit, to aid low-income families. While Prime Minister Keir Starmer considers this change, he intends to uphold other contested benefit restrictions.

(With inputs from agencies.)