UK households’ spending power to drop by £3,000, warns thinktank

theguardian.com:

Households in Britain will see their spending power cut by an average £3,000 by the end of next year unless the new government acts to counter the biggest drop in living standards in at least a century, research has indicated.

Adding to pressure on Boris Johnson’s successor as prime minister to tackle a worsening cost of living crisis, the Resolution Foundation thinktank said soaring energy bills would cut household incomes by 10% and push an extra 3 million people into poverty.

The thinktank said the outlook for living standards was “shocking” and “terrifying”, noting that without beefed-up support from the state, the drop in the typical household’s income would be twice as severe as that in the global financial crisis of the late 2000s and worse than the 8% drop that followed the oil price shock of the mid-1970s.

Lalitha Try, a Resolution Foundation researcher, said: “No responsible government could accept such an outlook, so radical policy action is required to address it. We are going to need an energy support package worth tens of billions of pounds, coupled with increasing benefits next year by October’s inflation rate.”

It came as a separate report warned that a “significant humanitarian crisis with millions of children’s development blighted” is on the way without urgent government support to alleviate fuel poverty.

The report, led by Prof Michael Marmot, director of the UCL Institute of Health Equity (IHE), warned that high fuel costs and rising poverty were damaging health and that growing up in cold homes would have “dangerous consequences” for many children now and into adulthood. Cold homes adversely affect children’s development, and cause and worsen respiratory conditions and mental health problems.

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