HOUSEHOLDS face the “terrifying” prospect of the biggest squeeze in living standards for a century, a think tank has said.
Real household disposable incomes are on course to fall by 10% over this year and next, the Resolution Foundation has warned.
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This is the equivalent to £3,000 for the typical household.
It predicts that the number of people living in absolute poverty will rise by three million, to 14 million people in 2023-2024.
With real earnings falling at their fastest rate since 1997, the Resolution Foundation also warns that by the middle of next year, real growth pay since 2003 will be wiped out.
The think tank said that while the economic outlook is “highly uncertain”, the scale of the cost of living crisis means the new Prime Minister will need to offer household’s significant support.
Lalitha Try, a researcher at the Resolution Foundation, said: “Britain is already experiencing the biggest fall in real pay since 1977, and a tough winter looms as energy bills hit £500 a month.
“With high inflation likely to stay with us for much of next year, the outlook for living standards is frankly terrifying.”
It comes as the boss of Ovo Energy Stephen Fitzpatrick told the BBC helping low income families with energy bills “has to be the first order of business” for the next prime minister.
The energy regulator Ofgem confirmed last week that energy bills will rocket to £3,549 on average per year, piling further mister onto households.
The Tory leadership contest is due to end next week, with either Liz Truss or Rishi Sunak set to take over as Prime Minister.
