Will I ever have more spare cash in my pocket?

Many families may see little real improvement in their finances over the next few years, despite more positive government forecasts.

New figures from the Joseph Rowntree Foundation (JRF) suggest that average annual household disposable incomes will grow by just £40 during the current parliament.

And from April 2026 to April 2029, incomes are actually expected to fall by £580.

The charity says this is partly because of weak real earnings growth and rising housing costs.

Forecasts less optimistic than government projections

In this week’s Spring Statement, chancellor Rachel Reeves was far more optimistic.

She said GDP per capita - a measure of average economic output per person - will grow by 5.6% during the current parliament.

Reeves also said that, after accounting for inflation, people are forecast to be “over £1,000 a year better off” by the next election.

But JRF believes its figures are more accurate, as they’re modelled on a household basis and factor in real-world housing costs.

£40 growth 'isn’t enough’

Chris Belfield, chief economist at the Joseph Rowntree Foundation, praised the government for focusing on the cost of living, and taking steps like reducing energy bills and scrapping the two-child benefit cap.

However, he said a £40 increase in disposable income over five years “isn’t enough”.

“It should not be too much to ask for families who have been struggling for years to start to feel better off,” he commented.

“We will never have a stronger economy if families don’t feel more secure and able to take each and every opportunity to improve their lives.”

Mr Belfield added that the government needs to focus on driving up living standards so families can “feel the change day to day”. 

“This needs action across all aspects of government to bring down people’s costs and boost their incomes,” he said.

What can I do to manage rising costs?

If you’re struggling to keep up with ever-increasing costs, there are some steps you can take to ease the burden.

See what benefits you could claim

Find out what financial support from the government you could be entitled to.

Try our benefits calculator or get in touch to see if you’re getting all the help you’re eligible to receive.

Review your spending

Make sure you know how much money you have coming in and how it’s being spent.

You’ll then be able to see where you can make savings and prioritise money for essential expenses.

Check out our guide to how to create a budget to get started.

And give our budget planner a try - it’s free and easy to use.

Tackle problem debts

If cost-of-living pressures have led to you falling into debt, then get in touch for confidential, practical and impartial debt advice.