Household incomes set to fall by £2,100

Based on findings from its annual Living Standards Outlook 2023, the report also notes that while the 2023-24 financial year should be one in which inflation starts to fall rapidly, this will be offset by a range of living standards headwinds.  

This includes higher energy bills – which will cause the typical energy bill to rise from £2,000 in 2022-23 to £2,850 in 2023-24, rising personal taxes, and increased mortgage costs.  

As a result, typical after-housing-costs incomes for working age families are set to fall by three percent in 2022-23 and by four percent in 2023-24 – a seven percent fall over two years, worth £2,100 for a typical family. This, combined with a weak recovery from 2024 onwards, would leave typical household incomes still below pre-pandemic levels by even 2027-28.  

The report also found that 23% of adults said they couldn’t afford to replace or repair major electrical goods, while 11% said they were hungry but didn’t eat because of a lack of money in the past month.  

Commenting on these findings, Resolution Foundation researcher Lalitha Try said: “Britain is only at the mid-point of a two-year income squeeze, which is set to leave typical families £2,100 worse off. The crisis is already taking its toll on families, with over six million adults reporting they are going hungry as a result. 

“Low-income families have been hit hardest by soaring energy bills and food prices, and are most likely to have seen both their financial circumstances and their health deteriorate. The Government has rightly prioritised them in its crisis response – with support targeted at vulnerable households and tax rises hitting better-off families.” 

Health Foundation chief executive Dr Jennifer Dixon added: “The cost-of-living crisis is disastrous for family finances, particularly for those on low incomes and families with more than two children. The crisis is causing immediate damage to the nation’s health with higher food insecurity, people under strain as they fall behind with bills and increased prevalence of emotional distress. 

“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.”