Britons poorer than they were in 2019 as living standards continue to fall
Disposable income after inflation is now over £20 per month lower than six years earlier, with the average person having £38 less to spend per month after tax than at the end of 2024 following three consecutive quarters of declines. Compared to summer 2019, disposable income is down by £1 per month after inflation and more than £20 lower than in December 2019. The 2019–2024 Parliament is the first in UK history to oversee a fall in disposable income in real terms. Only a few similar declines have occurred since the 1950s, with the longest previous stretch lasting five quarters from December 2015 to March 2017 during the Brexit period.
Britain has experienced three major shocks in less than two decades: the 2008 financial crash, Brexit, and the cost-of-living crisis alongside COVID-19. This has caused many people in their 30s to have spent their working lives amid crises. The government has responded with higher living wages and measures to address energy bills, prescription fees, fuel duty, and rail fares. Inflation was 3.2% in November, and real wages rose more in the last year than in the first ten years of the previous government. There have been six interest-rate cuts since the election.
The Joseph Rowntree Foundation projects that living standards could fall by about £850 a year over this parliament. Lifting the two-child cap would help cushion low-income households, while frozen tax thresholds are expected to push thousands into higher real taxes by the end of the parliament. Sky News is monitoring Labour's performance against its targets on living standards, inflation, and growth.
