'Painful' years ahead, think tanks warn, as living standards set to fall

People are facing a "painful" and "depressing" few years ahead, economic think tanks have warned, after forecasts showed growth in living standards grinding almost to a halt.

Typical working-age households would see their disposable income fall by £1,050, or 3%, between now and 2029, according to the Resolution Foundation, while the Institute for Fiscal Studies (IFS) said the current decade would be the worst for household income growth on record.

The UK's official forecaster said its latest economic forecast painted a "pretty grim picture".

The Office for Budget Responsibility (OBR), blamed the difficult financial situation facing the UK on higher borrowing costs and inflation caused by the US-Iran war.

But that would not be enough to offset the impact of higher energy bills, the Resolution Foundation said.

"The first half has been marked by rising living standards, solid economic growth and extra funding for public services," she said.

There would also be growing pressure on the government's spending plans over the parliament, Miller added.

"Whether or not they are delivered matters because the spending plans underpin the plan to bring down borrowing," she added.

Healey, speaking on the BBC's Today Programme, said "economic storms", including the Iran war and Russia's invasion of Ukraine, were affecting countries around the world and the government was seeking to help where it could.

Around 20 million households are set to receive the £100 payment based on which council tax band they are in.

But Conservative shadow chancellor Andrew Griffith said the Budget had left the public finances "more fragile" as Healey had reduced the "headroom" or the buffer that the country has between what it takes in revenues and what it spends.

Liberal Democrat leader Ed Davey said the £100 energy payment would be identified as the best item in the Budget for many people, but said that it was "not good enough" when you considered the "stealth tax rises" that were taking money out of people's pay packets.