British households’ income likely to fall by $3,470: Think tank

LONDON

British households’ spending power is expected to be slashed by an average of £3,000 ($3,470) by the end of the year as living standards drop by the largest margin in a century, a think tank said in its report.

The report, prepared by the Resolution Foundation, an independent think tank focused on improving living standards for those on low to middle incomes, said that household incomes are expected to fall by 10% this year as well as next year.

This means real earnings would fall at the fastest rate since 1997 and that by mid-2023 real pay growth since 2003 would be erased. Altogether, the number of those in absolute poverty would increase by 3 million.

The Resolution Foundation said that these estimates already include the government’s existing £30 billion package of support announced in March.

Inflation in Britain is now in the double-digits, 10.1%, its highest level in 40 years, driven mainly by surging energy prices.

The think tank called for tens of billions of pounds of further government support.

Lalitha Try, a researcher at the Resolution Foundation, said that the future of British living standards looked “terrifying.”

"Typical households are on course to see their real incomes fall by £3,000 over the next two years -- the biggest squeeze in at least a century -- while three million extra people could fall into absolute poverty,” she said.

"No responsible government could accept such an outlook, so radical policy action is required to address it. We are going to need an energy support package worth tens of billions of pounds, coupled with increasing benefits next year by October's inflation rate.

"The new prime minister also needs to improve Britain's longer-term outlook, which can only be achieved by a new economic strategy that delivers higher productivity and strong growth," Try added.