Money Wellness
W mother holding their child whilst they put their hand above a radiator
category iconcost of living
calendar icon04 Mar 2024

2020s set to be second decade in a row without recovery in living standards

Recent research from independent social change organisation, Joseph Rowntree Foundation (JRO) shows what the latest economic forecasts mean for households across the UK ahead of Wednesday’s Spring budget. They stress that there is need for immediate measures to support living standards in the Budget, and beyond- to build the foundations for a much stronger social settlement that can provide proper economic security to families right now and for the long-term. 

While Hunt is optimistic the economy has taken a better turn, there's been little mention of support for the most financially vulnerable, and we're seeing a record demand for free debt advice. We're helping around 1,000 people a day, and it's not just those on low incomes that are contacting us. Millions across the UK are suffering from the effects of inflation, high interest and energy rates. 

The JRO's findings reflect this, and they conclude that, 'The 2020s are set to be a second decade without a recovery in living standards. In fact, by the end of the 2020s, many families will be and feel poorer than they did at the start'.   

An overview of the findings show:

  • Post tax earnings in Q1 2024 are £2,400 lower for the average working family than they were in Q1 2021.
  • A basket of essential goods and services (excluding housing) for the average family is currently £270 more expensive a year than Q1 2021. This is expected to improve over the coming years, but essentials are predicted to remain less affordable until 2029.
  • Housing costs are rapidly rising relative to both earnings and wider prices, and by the beginning of 2029 the average family will have seen their housing costs rise by nearly £1700 a year in real terms compared with  Q1 2021.

The JRO warns that as this is an election year, politicians are far more likely to place emphasis on electoral calculations than on long lasting solutions to national crises that are affecting households, but place emphasis on the fact that many of these challenges ‘could be turned around with the right political will,’ and conclude from their research what the Budget should focus on.

To ensure financial and social security across the UK, the JRO call on the government to increase immediate targeted welfare for families through existing channels of support such as the household support Fund, making sure Local Housing Allowance and Support for Mortgage Interest are adequate and up to standard, as well as protecting spending per head on public services.

They’d also like to see the strengthening of universal credit, to make sure everyone gets protected minimum amount of support to afford life’s essentials, whilst reforming the housing market to make more affordable and secure tenures, and a commitment to changing the care infrastructure so that parents have access to the right kind of childcare, as well as proper financial support for people who need to leave work temporarily to care for loved ones.

 

Avatar of Lydia Bell-Jones

Lydia Bell-Jones

With a background in banking, Lydia has been writing professionally for over five years. She is passionate about helping people improve their personal finances and has a particular interest in the connection between money and mental health.

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