In a striking display of poverty in the UK, the think tank also details the suffering of the poorest in the cost of living crisis who are unable to eat or afford even the bare essentials.
A total of six million adults (11 per cent) reported being hungry in the past month. They didn’t eat because they didn’t have enough money for food.
There are worryingly large increases in people unable to afford essentials compared to the pre-pandemic period. Around 12 million people (23 per cent) can’t replace electrical items like kettles or fridges when needed, up from 8 per cent in 2019-2020.
With so much of their income spent on essentials, 14 million adults (27 per cent) don’t have enough left over to save even £10 a month.
Income inequality will rise every year and could reach a record high of 40.8 per cent by 2027-2028, according to the Resolution Foundation’s predictions. That’s higher than the previous peak just before the 2008 financial crisis.
Middle earners will suffer the largest fall in their living standards over the next two years as mortgage bills soar, with households expected to face a £3,000 annual increase in their mortgage costs.
Over the course of the two-year squeeze, real incomes among the poorest fifth of households will fall by 4 per cent, compared to 9 per cent for richer households. This is largely because benefits will rise by 10.1 per cent in April, cost of living payments and low-income households are less affected by higher mortgage bills.
And the bleak reality is that low-income families have faced poor living conditions for years after more than a decade of cuts to the welfare system. According to the New Economics Foundation, £14bn was taken out of the welfare system between 2010 and 2021.
The drop in income will be more of a shock to middle earners, used to a better standard of living. But it will still be the poorest who are hit the hardest by the cost of living crisis.
In November 2022, the Resolution Foundation predicted the richest 10 per cent of households in effect faced an inflation rate 1.5 per cent lower than the poorest 10 per cent.
Dr Jennifer Dixon, chief executive of the Health Foundation, added: “Action to tackle the cost of living must recognise both immediate and longer-term health risks created by growing financial insecurity and debt. The government must act now and craft an intelligent strategy targeting those at greatest risk to avoid hampering the nation’s prosperity in years to come.”
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