Middle and high-income households in the UK are heading towards the worst ever era of declining living standards since the 1960s, the Institute of Fiscal Studies has warned.
Middle and High-Income Families Face Record Living Standard Plunge
According to the think tank's analysis of official figures, the incomes of middle and high-class families decreased by 1.6% in 2022–23 compared to 2019–20.
By the end of this session, they are expected to have seen the most significant drop in the standard of living since records started in 1961.
It implies that ever since the previous election, the government will have overseen record tax increases and a record fall in living standards, according to the IFS.
The incomes of the poorest third of British households fell by 1% over the same period, making it one of the greatest declines ever recorded.
In virtue of the collapse in living standards, inequality levels have decreased in the four years leading to 2022-2023; however, the IFS stated that this has only happened because incomes “performed very poorly” across every income level.
The analysis showed that middle and high-income households have suffered the worst consequences of high inflation and frozen tax brackets.
Poverty-stricken households have also been badly impacted by the surging living costs, but they were relatively sheltered by the government-assigned support, which included cost of living payments.
Rising Food Insecurity and Heating Struggles as UK's Cost-of-Living Crisis Deepens
Over the past four years, the number of people experiencing food insecurity has increased by more than two million to 7.3 million.
Meanwhile, an additional 4.3 million individuals are unable to effectively heat their homes, raising the overall number to 7.2 million.
According to the estimates, around 200,000 additional renters have fallen into total poverty as a result of the pandemic's record rent increases.
This means they have a specific income level after housing costs. The tipping point for a childless couple is having no more than £15,600 in annual income.
Sam Ray-Chaudhuri, an economist at IFS and the report's author, stated: “The cost-of-living crisis has seen alarming rises in the share of households facing food insecurity or unable to adequately heat their homes. With further poor income growth forecast, and an unenviable fiscal position, bringing about a substantial improvement in living standards will be a significant challenge for the next government.”
A Treasury spokesman remarked: “The last few years have not been easy” but added that the economy had “now turned a corner.”
He went on to say: “We are in a new economic moment, and it is important we stick to the plan to grow the economy so we can deliver a brighter future for Britain and improve opportunity for everyone.”