UK Households Face £1,050 Income Drop by 2029, Think Tank Warns

Typical working-age households in the UK will see disposable income fall by £1,050, or 3%, between now and 2029, according to Resolution Foundation analysis published after Chancellor John Healey's Budget on Oct. 29, 2026, BBC News reported. The figure covers disposable income after taxes, benefits and housing costs for non-pensioner households.

How much will household income drop by 2029?

The Resolution Foundation's forecast measures the period from the current Budget through 2029 and applies specifically to working-age households. Over the full parliament, the think tank said non-pensioner household incomes will have risen by only £600 once housing costs, taxes and benefits are factored in, with nearly all of that gain booked in the first half of the term.

What does the Institute for Fiscal Studies say about this decade?

The Institute for Fiscal Studies said the current decade is on track to be the worst for household income growth on record, according to BBC News. The IFS assessment aligns with the Resolution Foundation's broader point that momentum built earlier in the parliament has stalled.

Why did the OBR call its forecast 'pretty grim'?

The Office for Budget Responsibility, the UK's official forecaster, said its latest numbers painted a "pretty grim picture." The OBR cut its GDP growth forecast to 1% for 2027, down from 1.2% in 2026 and sharply below its March assessment. It also raised its 2027 inflation forecast to 3.4% from an earlier 2% estimate. The OBR attributed the deterioration to higher borrowing costs and inflation linked to the US-Iran war, while cautioning that actual inflation could land well above or below its projection.

What is the government doing to offset rising costs?

Healey announced a £100 support payment aimed at cushioning households against higher energy prices. "The government could 'never remove completely' cost of living pressures," Healey said, while describing the Budget as offering "breathing space." The Resolution Foundation said the payment would not fully offset higher energy bills, which it projected will still exceed levels seen during the 2022 energy crisis even with the new support in place.

How are think tanks responding to the Budget?

"This parliament is increasingly looking like one of two halves," said Ruth Curtice, chief executive of the Resolution Foundation, per BBC News. "The first half has been marked by rising living standards, solid economic growth and extra funding for public services," she said, adding that the second half would be "tough going." Curtice said the government's response amounted to a "scattergun" Budget that did not adequately target the poorest households.

Key figures from the Budget forecast

• Working-age household disposable income: down £1,050 (3%) by 2029 — Resolution Foundation
• Non-pensioner household income gain across the full parliament: £600 — Resolution Foundation
• GDP growth forecast: 1.2% (2026) falling to 1% (2027) — OBR
• Inflation forecast for 2027: raised to 3.4% from 2% — OBR
• Household energy bill support: £100 payment — UK Treasury

Frozen tax thresholds are also reducing take-home pay, the BBC reported, compounding the squeeze identified by both the OBR and the Resolution Foundation heading into 2027.

Artiglio is A coming-soon iPhone chief of staff for briefings and drafts. Not on the App Store yet.