'Back to cost of living crisis': Households will be £770 worse off by next UK election, experts say

Living standards could fall to “depths seen in the cost of living crisis” by the end of this parliament, according to new analysis.

The Joseph Rowntree Foundation predicts that average families will be £770 worse off in real terms in October 2029 compared with today.

Average household disposable income after housing costs, which is the measure used to determine living standards, is currently £41,843. In 2029, it will have fallen to £41,070 in real terms.

It reached a low of £40,689 in 2023, amid the cost of living crisis.

The Office for Budget Responsibility (OBR) forecast that living standards will grow by an average of just over 0.5% a year in the next few years, but the Joseph Rowntree Foundation’s modelling takes into account housing costs.

It also uses the Family Resources Survey, which is used to calculate poverty figures, to determine how incomes are changing for each household.

Poverty is set to rise for all family types except pensioners, and households with children are most at risk.

Around 100,000 more children are set to be in poverty by October 2029, along with 300,000 more working-age adults.

Single parent families will be £1,000 worse off on average by October 2029 compared to now, with couples with children worse off by £1,760.   

Inequality is also set to rise. The poorest third of households will see their real disposable incomes fall by 3.3% between today and October 2029, while the highest income third see a fall of 1.7%.

The analysis comes after chancellor Rachel Reeves announced her autumn budget, which she said will “put more money in people’s pockets”.

Paul Kissack, chief executive of the Joseph Rowntree Foundation said: “The chancellor is right that change must be felt. The people who needed to feel the most change are those living in and at risk of hardship.”

Kissack welcomed the chancellor’s investment in social homes, help for carers to work and care, a rise in the minimum wage and a cap on how much can be deducted from universal credit.

But he added: “It’s deeply worrying that we haven’t seen changes to social security that will seriously bring down hardship. In particular private renters will feel let down by the choice to keep local housing allowance frozen meaning that it will become further out of step with local rent levels, which have soared in recent years.”

Do you have a story to tell or opinions to share about this? Get in touch and tell us more. Big Issue exists to give homeless and marginalised people the opportunity to earn an income. To support our work buy a copy of the magazine or get the app from the App Store or Google Play.