Living standards in the UK are expected to decline by 2030, with the lowest-income households experiencing a significantly faster drop compared to middle and higher earners. This finding, from a new report by the Joseph Rowntree Foundation (JRF), raises concerns about the Labour party’s pledge to improve the economic conditions for working people, led by Keir Starmer. The report’s release precedes Chancellor Rachel Reeves’ spring statement, in which she plans to announce cuts to public spending rather than increasing borrowing or taxes, aiming to adhere to the government’s “iron-clad” fiscal rules.
The forecast is based on the expectation that the Office for Budget Responsibility (OBR) will adjust its economic forecasts to align with the Bank of England and other primary forecasters, predicting a significant reduction in the expected growth rate for the year. The JRF describes this situation as a “dismal reality,” indicating that the coming year might mark the peak in living standards for this parliament. According to the analysis, the average family could be £1,400 worse off by 2030, representing a 3% decrease in disposable incomes, while the lowest-income families might face a £900 yearly loss, constituting a 6% decrease in available funds.
The JRF argues against addressing these issues through further cuts, especially to disability benefits, and suggests considering tax increases for the wealthiest instead. This stance aligns with a letter from leading economists to the Financial Times, warning against cutting spending or investment, as such measures could exacerbate economic challenges.
Areas such as prisons, justice, and local government, which have already faced significant cuts since 2010, are expected to see further reductions, casting doubt on Starmer’s assertions that the government is not reverting to austerity measures. The financial constraints faced by the government, exacerbated by higher borrowing costs and lower-than-expected growth, have reduced the initially available fiscal headroom, necessitating tough decisions on revenue generation or expenditure cuts.
Local government leaders are among those waiting anxiously for the spring statement, fearing it could exacerbate the financial struggles of councils, potentially leading to more bankruptcies and impairments in the delivery of crucial services. The political ramifications of these economic challenges are evident in recent polling, which shows significant damage to Labour’s reputation regarding economic stewardship, with no party leader now trusted on the economy and a slight preference among voters for the Conservative Party to manage economic issues.
Despite these challenges, the government plans to address the shortage of skilled construction workers as part of efforts to boost economic growth and housebuilding, with a £600 million investment aimed at training 60,000 new construction workers. However, the Treasury maintains that real wages are on the rise, countering that these figures reflect the worst living standards growth since ONS records began, and emphasizing that the government’s priority remains to increase the income of working people while arguing that it has taken significant steps to support household incomes since the election.
Source: https://www.theguardian.com/uk-news/2025/mar/22/all-uk-families-to-be-worse-off-by-2030-as-poor-bear-the-brunt-new-data-warns
