Britons face the worst decade for income growth on record, think tanks warn after the Budget

30th October 2026

Households across Britain are living through the weakest decade for income growth since records began, according to new analysis published in the wake of this week’s Budget. Three of the country’s leading think tanks say the cost-of-living help announced on Wednesday will only soften the blow.

Key points

The 2020s are on course to be the weakest decade for real household income growth since 1950 (IFS)
Typical non-pensioner incomes forecast to fall by £1,050 between 2026-27 and 2028-29 (Resolution Foundation)
Energy bills after support forecast at £1,750 this year, higher in real terms than in 2022-23
The Budget’s £100 energy payment starts in January 2027

What the think tanks found

The Institute for Fiscal Studies says the 2020s are on track to be the worst decade for inflation-adjusted household disposable income growth since comparable records began in 1950. It also expects this Parliament to be the second-worst for income growth since 1979.

The Resolution Foundation forecasts that typical non-pensioner household incomes will fall by £1,050, or 3%, between 2026-27 and 2028-29. The Joseph Rowntree Foundation says the average household will be £450 worse off in real terms by April 2029 than in April 2024. The Office for Budget Responsibility’s own forecast is for real household income growth of just 0.4% a year over this Parliament.

−£1,050

typical household income, 2026-27 to 2028-29

0.4%

a year: OBR forecast for real income growth

£1,750

typical energy bill after support, 2026-27

Why incomes are being squeezed

The think tanks point to weak real wage growth, rising housing costs and stubbornly high energy bills. Typical household energy bills, even after government support, are forecast at £1,750 this year. In real terms that is higher than the £1,685 households paid at the height of the 2022-23 energy price shock.

Renters face extra pressure. More than a million private-renting families are expected to lose out because the Local Housing Allowance freeze has been extended into 2027-28, and 91% of them are in the poorer half of households.

“Cost-of-living support is being spread far too thinly.”Ruth Curtice, chief executive, Resolution Foundation

What the Budget gives you

Chancellor John Healey’s first Budget on Wednesday included a £4.4bn cost-of-living package. The two headline measures are:

A £100 Household Energy Payment for up to 20 million households in England in council tax bands A to D, starting in January 2027.
Zero VAT on domestic electricity extended to July 2027, which the government says will cut the Ofgem price cap by around £50 in April 2027.

According to the analysis, the poorer half of households will receive an average of £158 from these measures across this year and next, compared with £144 for the better-off half. The think tanks say that is welcome, but small against the scale of the squeeze.

Sources: Institute for Fiscal Studies, Resolution Foundation, Joseph Rowntree Foundation, OBR.

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