While household income growth appears to have been strong in 2024, the UK has still lost half a decade due to the cost-of-living crisis.
New data published by the think tank the Resolution Foundation shows projected growth up to 2029-30 is again weak, and outcomes are worse for lower-income households.
The economic outlook would need to significantly improve to avoid the 2020s being a poor decade for income growth, although targeted policy changes could also directly improve the outlook for the poorest, it said.
“We project a strong real income recovery in 2024-25, but despite this, overall, there has been a lost half-decade for income growth after 2019-20. And the effects of the cost of living crisis are still with us, with the prevalence of food insecurity in January 2025 still twice as high as it was in 2021,” the group said.
“We cast forward household income data from 2023-24 to each year up to 2029-30, based on official economic projections and planned tax and benefit policies, with four scenarios. In our central case, the typical non-pensioner income rises by just 1% between 2024-25 and 2029-30 after accounting for inflation. This would mean zero growth over the whole decade.”
It noted that results are worse for lower-income households, with the poorer half in 2029-30 1% worse off than in 2024-25 and 2% below 2019-20 levels. Those on very low incomes are projected to be fully 8% (£1,000) worse off at the end of the decade compared to 2019-20.
By comparison, the typical pensioner income is projected to rise by 5% between 2024-25 and 2029-30, and that of outright owners by 4%. In contrast, zero household income growth is projected for the median child and the typical mortgagor is projected to be 1% worse off in 2029-30.
“More optimistic economic assumptions would improve the outlook, while removing policy headwinds for lower-income households would directly help,” the group said.
“Removing the two-child limit (funded through higher taxes) would move lower-income households from negative to positive growth over the next five years, and avoid a rise in child poverty.”
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