A new report from the Resolution Foundation suggests that living standards in the UK are set to remain mostly flat for the rest of the decade, with lower-income households expected to see

their financial situation worsen.

According to the think tank, median household incomes—after accounting for taxes, benefits (including pensions), and housing costs—are projected to grow by just 1% above inflation by the 2029/30 financial year. For poorer households, incomes could actually fall by 1%.

The report highlights how rising interest rates will hit mortgage-paying families, who are likely to see a 1% drop in income. In contrast, homeowners without mortgages could see a 3% rise. Pensioners are predicted to fare the best, with a potential 5% increase in income, while families with children may see no real income growth at all.

Adam Corlett, the foundation’s principal economist, noted that these projections could improve if the economy performs better than expected. He added that scrapping the two-child limit on certain benefits—a policy brought in by the previous Conservative government—could ease the pressure on low-income families.

While Prime Minister Keir Starmer is reportedly reviewing the controversial benefit cap, he has said he won't reverse recent changes aimed at tightening access to long-term sickness and disability support—a stance that has sparked dissent within the Labour Party.