With the UK only halfway through a two-year forecast cost of living crisis, new research has now revealed that typical household disposable incomes for working families is on track to drop by three per cent this financial year and four per cent next year, leaving families £2,100 worse off.

According to the Resolution Foundation’s Annual Living Standards Outlook 2023 (1), although the 2023-24 year should see inflation start to fall, this will be offset by the likes of higher energy bills, increasing personal tax and rising mortgage costs.

The report authors have now issued a warning that millions of families are already struggling to cope, with the crisis only now at the halfway stage.

For example, it was found that 23 per cent of adults (or 12 million people) say they are unable to repair or replace essential goods like washing machines and fridges, while 11 per cent said they have gone hungry because of insufficient funds.

Dr Jennifer Dixon, chief executive of the Health Foundation, commented on the findings, saying: “The cost of living crisis is disastrous for family finances, particularly for those on low incomes and families with more than two children. 

“The crisis is causing immediate damage to the nation’s health with higher food insecurity, people under strain as they fall behind with bills and increased prevalence of emotional distress.

“Action to tackle the cost of living must recognise both immediate and longer-term health risks created by growing financial insecurity and debt. The government must act now and craft an intelligent strategy targeting those at greatest risk to avoid hampering the nation’s prosperity in years to come.”

The report did note, however, that support from the government thus far has gone to those most in need, with targeted cost of living payments this year and next, alongside a 10.1 per cent benefits uprating come April next year, meaning that the scale of income falls will be smaller for poorer households than richer ones.

This is a very difficult time for many and if you are struggling financially for whatever reason during the cost of living crisis, it’s important to remember that there is help available out there should you find yourself in debt.

When it comes to personal debt, it’s advisable to take action as soon as you realise that there’s a problem. Ignoring the situation will only make it worse and can see you spiral even further into difficulties, so always get in touch with your creditors quickly to get on top of it and put an agreement in place to settle what is owed.

If you do owe money and are struggling to pay it back, there are measures you can take to help you regain control. If you are struggling with debt at the moment because of cost of living challenges, get in touch with us today for debt advice.

References:
1. https://www.resolutionfoundation.org/press-releases/uk-households-just-halfway-through-two-year-cost-of-living-crisis-with-incomes-set-to-fall-by-2100/