UK living standards to decline by 2030, low-income families hit hardest with 6% income drop: Report – The Times of India

UK families face declining living standards by 2030, with lower-income households experiencing twice the decline compared to middle and high-income earners, according to recent data from the Joseph Rowntree Foundation (JRF).
This challenges Keir Starmer‘s commitment to improve working people’s financial situation. prioritising increased income for working individuals. The prime minister’s December announcement included new objectives before the anticipated 2029 general election.
The JRF’s economic analysis precedes Rachel Reeves’s spring statement scheduled for Wednesday, where she will announce public spending reductions whilst adhering to the government’s strict fiscal regulations, avoiding increased borrowing or taxation.
The JRF analysis anticipates the Office for Budget Responsibility (OBR) will align its forecasts with the Bank of England on Wednesday, likely reducing this year’s growth projection from 2 per cent to approximately 1 per cent.
The JRF characterises the situation as a “dismal reality”, indicating that current living standards may peak during this parliament, as reported by the Guardian.
JRF analysis further projects average families will lose £1,400 by 2030, representing a 3% disposable income reduction. Lower-income families face a £900 annual reduction, equating to a 6 per cent disposable income fall.
Should living standards remain unrecovered by 2030, Starmer would fail his primary objective and lead the first government since 1955 experiencing decreased living standards across a complete parliament.
The projected decline in living standards under Labour governance, particularly impacting the least affluent comes amid intensified party unrest.
Labour MPs are expressing growing concern over Reeves’s £5billion benefits reduction plan, affecting disabled individuals.
By 2030, mortgage holders face £1,400 additional annual interest payments, renters £300 more yearly, while average earnings decrease by £700 annually. The poorest third will particularly suffer from increased housing costs, reduced real earnings and static tax thresholds.
As a possible solution, JRF’s Alfie Stirling advocated increased taxation for wealthy individuals rather than cuts to address declining living standards. “There is no doubt the government is facing an unenviable list of economic pressures and uncertainties, ranging from the domestic to the international. But how you manage these risks is a matter of political choice” he said. “It is wrong, and ultimately counterproductive, to try and rebuild the public finances through cuts to disability benefits. Instead, government should be addressing hardship and raising living standards directly, as part of their strategy for growth.”
“Fiscal pressures should be met through tax reform. There are a number of options to raise revenue from those with the broadest shoulders, while also supporting growth by removing perverse incentives in the tax system and staying within the government’s manifesto commitments,” he added.
Leading economists recently warned against spending reductions in the Financial Times, stating “the UK cannot cut its way to growth”.
Unprotected sectors including prisons, justice and local government face potential cuts, contradicting Starmer’s anti-austerity stance. Local government has already experienced 45% real-terms reductions since 2010.
Reeves’s October budget retained £9.9 billion fiscal headroom, but increased borrowing costs and reduced growth have eliminated this buffer, necessitating revenue increases or expenditure cuts.
Local authorities await Wednesday’s statement anxiously, fearing reduced funding might cause more council bankruptcies and strain essential services delivery.
Councillor Louise Gittins warned that insufficient investment threatens crucial service delivery and government objectives.
Recent Opinium polling reveals diminished trust in Labour’s economic management. Starmer (-32%) and Reeves (-38%) face significant distrust, while Reform’s Farage, Conservative’s Badenoch, and shadow chancellor Stride show similar negative ratings.
The government announces £600million investment for 60,000 additional construction workers to support housing development and economic growth.
A Treasury spokesperson highlighted rising real wages, increased national living wage, pension triple lock benefits, and tax protection measures, despite inheriting poor living standards growth.