Living standards 2025 outlook ‘hardly cause for celebration’, says UK thinktank
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Household incomes to stagnate or fall but will be offset by better public services, says Resolution Foundation. Household incomes will stagnate or fall next year but the chancellor, Rachel Reeves, will be hoping people feel better off as a result of improvements to public services, a leading thinktank has said.
![[Rachel Reeves in her 11 Downing St office: she wears a dark red blouse and sits in front of a wall painted in a similar colour by a window with white frames. Her red briefcase is on the windowsill. ]](https://i.guim.co.uk/img/media/74761bc31ecf78e98ee0037f0688df27b50b5363/1027_846_3217_1930/master/3217.jpg?width=445&dpr=1&s=none&crop=none)
The Resolution Foundation calculated a new measure of “real living standards” that took into account both disposable income and the “in-kind” benefits of public services. It found the worst-off 10% of people of working age could see a 2% decline in their disposable income, but that would be offset by improvements in public services where they would be £28 better off overall.
For the top half of earners, there was likely to be a 0.4%, or £140, fall in living standards once public service improvements were taken into account. Mike Brewer, the interim chief executive of the Resolution Foundation, said the “budget tax-rise gamble” from the chancellor was that “while people may not be better off in purely financial terms, they will feel better off if we can have better, less dysfunctional public services”.
The poorest households are hit hard by rising housing costs and hikes in council tax, while also being affected by real-terms cuts to social security payments. The richest households do not rely on public services as much, and benefit less from rises in minimum wages.
