London Daily

Focus on the big picture.
Friday, Aug 01, 2025

UK household incomes facing biggest decline since mid-70s, says thinktank

UK household incomes facing biggest decline since mid-70s, says thinktank

Resolution Foundation warns record-high energy prices amid Ukraine war could lead to hit worth £1,000 per household
UK household incomes are on course to collapse by the most since the mid-1970s after Russia’s invasion of Ukraine sent energy prices soaring to new highs, a thinktank has said.

The Resolution Foundation said the dramatic increase in global oil and gas prices was forecast to push UK inflation above 8% this spring, causing average incomes across Britain to fall by 4% in the coming financial year – a hit worth £1,000 per household, the biggest annual decline since 1975.

Warning the chancellor, Rishi Sunak, that urgent steps were required to help the poorest families in Britain with soaring living costs, the thinktank said weak wage growth and high inflation were expected to drive more children into poverty.

Inflation in the UK was already at 5.5% – the highest rate for 30 years – before Vladimir Putin ordered his troops into Ukraine. Now economists are warning that the conflict’s impact on global oil and gas prices will add to inflationary pressures around the world.

Although the UK sources relatively little of its gas supply from Russia – about 5% of its total imports – fears over supply restrictions amid the escalating conflict have driven up global wholesale prices.

Oil prices surged to $139 a barrel on Monday before falling back to about $125. UK gas prices rose to 800p a therm before falling to about 600p – still almost triple the price at the start of February.

The Resolution Foundation said UK inflation could therefore peak at 8.3% this spring, or even exceed the 8.4% rate of April 1991, which was the highest level for the measure of the increasing cost of living since 1982.

It said the damage for household incomes would have been bigger without the £350 boost provided by the government’s energy support package announced last month. Without taking this into account, analysts at the Bank of America last week had forecast the biggest drop in living standards since at least 1956.

The warning comes as the government prepares to increase the value of working-age benefits and the state pension by 3.1% from April. Over the course of this year, the Resolution Foundation estimated this would mean a real-terms cut in the value of benefits of more than £10bn.

The thinktank said Sunak needed to take evasive action to protect households from the squeeze. Adam Corlett, the principal economist at the Resolution Foundation, said: “The immediate priority should be for the chancellor to revisit benefits uprating in his upcoming spring statement.”

The chancellor has come under increasing pressure in recent days to use his mini-budget to address the economic impact of the conflict at home and abroad, including from backbench Conservatives urging a rise in defence spending and trade unions calling for more humanitarian aid for Ukraine and support for UK workers.

Tom Keatinge, the director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute, told MPs on the Treasury committee on Monday that Sunak needed to provide an urgent update.

“I would like to hear from the chancellor about how is he thinking about the impact of sanctions on the UK economy. It’s clearly a massive issue for the UK. So it would be good to hear how are the thoughts around dealing with cost of living crisis. How is that being thought through? I think communicating that soon would be important,” he said.

Retail industry bosses are warning that the squeeze on living standards would hit consumer spending this year, weighing down the UK’s economic recovery from Covid-19.

The British Retail Consortium said on Tuesday total sales rose in February by 6.7% compared with the same month a year earlier, and by 4.9% compared with the same month in 2020 before the pandemic struck, as shoppers returned to the high street after the government relaxed Covid restrictions introduced during the Omicron wave.

However, Helen Dickinson, the chief executive of the consortium, said sales would soon come under pressure. “The future is looking increasingly uncertain, with current demand unlikely to be sustained,” she said. “The cost of living will continue to spiral due to global inflation, increasing energy bills and the rise in national insurance this spring. With households facing lower disposable income, discretionary spend will be one of the first things to feel the squeeze.”

A Government spokesperson said: “We recognise the pressures people are facing with the cost of living, which is why we’re providing support worth around £20 billion this financial year and next to help.”
Newsletter

Related Articles

0:00
0:00
Close
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
×