Families could be left £2,100 worse off by the end of the next financial year


People are set to become even worse off over the next year, according to a think tank (Picture: Getty Images / iStockphoto)

Families in the UK are only halfway through the cost of living crisis and people are set to become further worse off, research suggests.

New analysis from the Resolution Foundation think tank indicates the average household will be left £2,100 worse off by the end of the next financial year.

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.’

Average households have experienced half of the lost income they are expected to suffer through the financial crisis, with the typical income set to drop by 3% by the end of March this year after housing costs.

Another 4% drop is predicted over the next 12 months by the end of March 2024.

The rising cost of energy bills is currently a huge concern for households across the UK (Picture: Metro.co.uk)

Many of the country’s poorest have had to choose between heating and eating this winter (Picture: Getty Images / iStockphoto)

Energy bills, fuel prices and the rising cost of groceries are thought to mostly be behind the loss in income.

The 7% drop is expected to hit families harder than during the financial crisis in 2008, the think tank said.

Households are likely to be worse off than they were before the pandemic, and it will take until 2028 to return to normal.

Between 2010 and 2012, the post-crisis squeeze still only reached a 5% drop in income.

The government said it provided £37 billion of support in 2022 targeted at those most in need, with the most vulnerable households receiving at least £1,200 to help with the cost of living. Every household in the UK is also entitled to £400 towards energy bills.

But the Labour Party has criticised the Conservative Party’s approach to handling the cost of living crisis.

Shadow chancellor Rachel Reeves said: ‘To hear that we are only halfway through this Conservative cost-of-living crisis will alarm many families, and again brings home the profound damage this government has done over the years.

‘Britain deserves so much more than the 13 years of Tory rule which have left growth on the floor, wages squeezed, living standards plummeting and our public services crumbling.’

The Labour Party has criticised the current government’s handling of the cost of living crisis (Picture: Getty Images)

Peter Marland, the chair of the Local Government Association’s Resources Board, called for the national government to provide more help and flexibility to local authorities.

‘Councils are urging the government to make the household support fund it has provided to councils permanent, alongside greater flexibility so they can ensure it helps people in the greatest need,’ he said.

‘This would also allow councils to crucially shift their focus from short-term crisis support to investing in preventative services which build financial capability and resilience, such as welfare benefit entitlement checks; debt advice; and employment, health, and housing support.’

The authors of the report further surveyed people on how they are coping through the cost of living crisis so far.

Almost a quarter (23%) of adults – equivalent to 12 million people – said they could not afford to replace large electrical goods like fridges and washing machines if they broke down. Before the pandemic, this figure was 8%.

And 11% said at some point over the last month they had gone hungry due to lack of money, compared to 5% before the pandemic.

Looking among the poorest fifth of families, more than a third (34%) believe their health has been affected by the rising cost of living.

Metro.co.uk recently spoke to several people who have turned to using fundraising pages to get through the cost of living crisis.

Get in touch with our news team by emailing us at webnews@metro.co.uk.

For more stories like this, check our news page.

Leave a Reply

Your email address will not be published. Required fields are marked *