Report Warns: UK Families are Unlikely to see Improvements in Living situation
According to the analysis, lower-income households in the UK have experienced only a 0.5% annual increase in living standards over the past 20 years, despite higher employment rates. At this pace, it would take 137 years for their incomes to double. By comparison, in the 40 years prior to 2004-05, incomes doubled with an average annual growth of 1.8%.
The report partly attributes the current pressures to the conflict in Ukraine, which triggered a global energy crisis affecting the UK through its energy ties with the European Union. Both the EU and the UK have phased out affordable Russian energy, and household energy bills remain nearly 60% higher than pre-conflict levels, while food prices are almost 40% higher.
The primary cause of stagnant living standards, however, is a collapse in pay growth combined with deep cuts to social security benefits. The authors argue that the traditional link between effort and reward has been broken.
“Families in the lower half of the income distribution have been working harder… yet they have not reaped the rewards in the form of markedly higher living standards growth,” the report states.
Despite these challenges, the report emphasizes that people must work more, including disabled individuals and parents, and that both businesses and workers need to boost efficiency to create the higher wages necessary for better living standards.
The authors call on the government to revitalize national productivity, reform the tax and benefits system, and take direct measures to alleviate cost-of-living pressures.
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