News   /   Economy

UK households’ spending power to drop by £3,000, think tank warns

People wearing protective face masks walk over Westminster Bridge in front of the Elizabeth Tower, more commonly known as Big Ben, in London, Britain, December 15, 2021. (File photo by Reuters)

Households in Britain are set to see their spending power dropped by an average of £3,000 by the end of next year, marking the biggest drop in living standards in the UK in at least a century, a new study has revealed.

The finding of the research published by the Resolution Foundation think tank on Thursday proves that soaring energy bills would cut household incomes by 10 percent and sink an extra three million Britons into poverty.

According to the think tank, the outlook for living standards was “shocking” and “terrifying,” and without the government’s support for the crisis, the drop in the typical household’s income would be twice as severe as that in the global financial crisis of the late 2000s.

Lalitha Try, a Resolution Foundation researcher, said, “No responsible government could accept such an outlook, so radical policy action is required to address it. We are going to need an energy support package worth tens of billions of pounds, coupled with increasing benefits next year by October’s inflation rate.”

Amid demands for immediate government measures to deal with the country’s economic situation and cost-of-living crisis, the outgoing Prime Minister Boris Johnson has said he will not make “major fiscal interventions” before leaving office next month.

A separate report has warned a “significant humanitarian crisis with millions of children’s development blighted” is well on the way to overtake any other crisis. The report, led by Professor Michael Marmot, director of the UCL Institute of Health Equity (IHE), warned that skyrocketing fuel costs and rising poverty were damaging health and there would be “dangerous consequences” for children growing up in cold homes.

The report said the cold homes cause and worsen respiratory conditions and mental health problems.

The UK is grappling with skyrocketing inflation which has been unprecedented for decades, prompting thousands of people in different industries to strike over payments, as they have trouble making ends meet.

Staff working at the Department for Business, Energy and Industrial Strategy (BEIS) are set to go on a strike on September 5, the same day the new prime minister is announced, the Public and Commercial Services Union (PCS) said, adding that the action was “a sign of things to come” for the next prime minister.

The country’s new leadership race is well under way between former British Chancellor Rishi Sunak and Foreign Secretary Liz Truss and its result is due to be announced on September 5.

Press TV’s website can also be accessed at the following alternate addresses:

Press TV News Roku