The Institute for Financial Studies is predicting that households will be almost 20% worse off by 2021. Britain is in the midst of the weakest growth in living standards in at least 60 years, with low income families faring the worst, a leading thinktank has warned.
Weak earnings growth, together with changes to taxes and benefits, will lead to a rise in inequality by 2021-22, according to the Institute for Fiscal Studies (IFS). In a new report on living standards, poverty and inequality, the IFS says incomes for the average family will not grow at all over the next two years.
The IFS calculated that average household incomes will be 18% lower in 2021-22 than could have been reasonably expected in 2007-08, before the global financial crisis took hold of the economy. It means a childless couple would be about £5,900 a year worse off than they might otherwise have been, rising to £8,300 for a couple with two young children.
The IFS said it amounted to the most sustained slowdown in income growth since comparable records began in 1961. Campbell Robb, chief executive of the Joseph Rowntree Foundation, which funded the report, urged the chancellor Philip Hammond to announce measures to support struggling families in next week’s budget.