The average family could be £1,400 a year worse off by the end of the decade, new analysis suggests.
Frozen tax thresholds, rising mortgage and rent costs, and falling real earnings are all predicted to take their toll.
But living standards for the poorest third are forecast to drop twice as much compared with middle and high earners.
The Joseph Rowntree Foundation (JRF) believes the government will miss one of its stated “milestones”, to raise living standards across the UK before the next election.
It says the £1,400 drop by April 2030 means a 3% fall in disposable income for the average family, while the lowest income households will be £900 per year worse off – a 6% fall.
The situation could be even bleaker for some as the analysis doesn’t account for the recently announced £5bn in cuts to disability benefits.
Average earnings are also set to fall by £700 per year by 2030, accoring to the JRF.
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The charity – which conducts research into reducing poverty – says it came up with its prediction by modelling forecasts from the Bank of England and others.
It also conducted a poll of 5,000 people with YouGov.
Alfie Stirling, its director of insight and policy, said Labour risks presiding over “a rapid rise in inequality” and becoming the “first parliament on modern record to see a fall in average living standards from start to finish”.
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The JRF calls the government welfare cuts “wrong” and counterproductive and wants the plan scrapped.
It also urges a new “minimum floor” for Universal Credit to help address hardship, and believes the government should instead raise cash by increasing tax on wealth and investments.
The analysis comes three days before Chancellor Rachel Reeves’ spring statement in which more cuts are set to be announced in a bid to improve the country’s finances.
Some £2bn in cuts to the civil service are expected – but it’s understood they won’t affect front-line services.
Ms Reeves has also confirmed to The Sun On Sunday that she won’t be announcing any new tax rises.
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Her speech will be responding to the independent Office for Budget Responsibility (OBR), which on the same day will publish its own forecasts on the economy, the cost of living and government finances.
Growth is Labour’s top priority but the Bank of England recently halved its growth outlook for the UK economy this year to 0.75%.
There are also worries next month’s hike to employer national insurance and the minimum wage will create further drag on investment.
