Incomes are set to have stagnated this year, with 2024 likely bringing little relief in real terms, leaving many worse off than in the years prior to the pandemic.
Spillover effects of climbing mortgage rates this year, higher rental prices and a freeze on tax rates are all set to weigh in, a report by think tank the Resolution Foundation found.
“Although [the] bank rate may peak shortly, the full impact on mortgagors is yet to be felt,” the report noted.
“Tax and benefit policy will also weigh on income growth,” it continued, with post-tax growth set to be slower than pre-threshold pay due to frozen rates and last year’s cost-of-living payments ending.
Overall, the think tank forecast a 4% fall in real household income between 2022 and 2024, pushing some 300,000 people into absolute poverty.
“For some, household incomes may now grow,” the group acknowledged, “but there is little sign of relief for those most at risk of harm from the higher cost of living.”
Given a general election is expected to be held next year, the Resolution Foundation dubbed the backdrop as “not ideal”, with living standards also falling below 2019 levels - before the pandemic.
“Tightening monetary policy means that there is no easy fix for the immediate living standards outlook overall, but additional targeted support needs to be considered,” the report added.
“We are moving into a big year politically.”