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Warning as millions of UK households to see income drop by £3,000

today5 September 2022 1

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As households’ purse strings draw tighter during the current financial climate millions could see a whopping £3,000 drop in income over two years as the cost of living crisis worsens. An independent British ‘Think tank’ group has issued the warning.

The Resolution Foundation has explained how Brits could be severely affected. Lalitha Try, a researcher at the Resolution Foundation, said: “Britain is already experiencing the biggest fall in real pay since 1977, and a tough winter looms as energy bills hit £500 a month.

“With high inflation likely to stay with us for much of next year, the outlook for living standards is frankly terrifying.” By 2023-2024 the 10% fall in mean disposable income “is likely to be the worst for at least a century” which is the same as £3,000 for average households, BirminghamLive reports.

Read more: Dad cuts energy bill by over £600 by updating kitchen appliance

The report states the worst two-year change should be expected following the “sharp rise” in the number of people in absolute poverty, projected at over three million between 2021-22 and 2023-24. Lalitha added: “Typical households are on course to see their real incomes fall by £3,000 over the next two years – the biggest squeeze in at least a century – while three million extra people could fall into absolute poverty. No responsible government could accept such an outlook, so radical policy action is required to address it.

“We are going to need an energy support package worth tens of billions of pounds, coupled with increasing benefits next year by October’s inflation rate. The new Prime Minister also needs to improve Britain’s longer-term outlook, which can only be achieved by a new economic strategy that delivers higher productivity and strong growth.”

A Government spokesperson said: “Countries around the world are grappling with rising prices but we recognise that inflation is causing significant challenges for families. We are continuing to support the economy and families through tax cuts and £37 billion worth of help for households throughout the year, including direct payments of at least £1,200 for eight million of the most vulnerable households.

“We are making necessary preparations to ensure a new government will have options to deliver additional support as quickly as possible.”

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