A prominent think tank, the Resolution Foundation, has projected that the living standards of UK workers will remain stagnant next year. This forecast implies that by the time of the expected election in 2024, individuals will be approximately 4% worse off than they were in 2019.
Several factors are contributing to this grim outlook, including higher mortgage rates, substantial tax increases, and an economy that has shown signs of stagnation. The Resolution Foundation suggests that UK workers are on track to face the most substantial decline in income over a five-year period since the 1950s.
Adam Corlett, the principal economist at the organisation, acknowledged that stable incomes next year may provide some relief to many households. However, he emphasised that the overall outlook for living standards remains bleak, with expectations of continued stagnation and further income reductions, particularly for less affluent households.
Additionally, a separate study highlights that economic stagnation in the coming year will be compounded by a slowdown in exports to Europe and the rest of the world due to a decline in global trade and unique trade barriers resulting from Brexit-related red tape.
The British Chambers of Commerce (BCC) stated in its quarterly economic forecast that although the UK avoided a recession this year, several economic indicators are now indicating "red flags," and the next two years are likely to bring consistently low growth.