British households face rocky road into 2024 – claims think tank

British households are on course to be poorer going into the coming election than they were coming out from the last one, research from the Resolution Foundation reveals.

But overall, the think tank reckons 2024 will see some easing of cost pressures.

REAL CHALLENGES

But with people’s experiences of the year ahead likely to be so varied, it says that there are real challenges for politicians trying to tell a single story about whether the country is making progress or not.

Torsten Bell, Resolution Foundation Managing Director, says: “Outright owners, alongside those who benefit most from tax cuts and wage rises, may think a corner has been turned.”

But he warns: “Those seeing their mortgages and rents surge, or benefit support cut back, most certainly won’t.

“This mixed picture however, contrasts with the far simpler story over this Parliament as a whole: British households are on course to be poorer (by 4%, or £1,200 on average) going into the coming election than they were coming out of the last one.

“That is something never seen before in modern British history. Our New Year’s resolution should be to make sure it never happens again.”

BAD NEWS STILL TO COME

Bell says that while savers have benefited from higher interest rates much of the bad news is still to come.

“Interest rates will move from boosting income growth to undermining it in 2024, as another 1.5 million households remortgage.

“They will face an average annual housing costs rise of around £1,800, even accounting for markets now expecting earlier rate cuts. Bear this in mind when you read news stories saying ‘homeowners will benefit from a fall in mortgage rates’ – what they mean is that the increases in people’s mortgage bills won’t be as painful as they would otherwise have been.

“I’d gently suggest they won’t feel like they’re ‘benefiting’ as their mortgage bill rises by hundreds of pounds a month.”

And he adds: “Those mortgagors affected face the biggest hits – but renters are much more likely to see some housing cost rise as rents respond to the recent high nominal earnings growth (for private renters) or inflation (for social renters), continuing the lates 2023 pattern.

This will make a real difference to who wins and loses in 2024.”

“Outright owners, meanwhile – now the single largest tenure – are completely protected. This will make a real difference to who wins and loses in 2024. Living standards growth is likely to be strongest for outright owners (2%), while mortgagors face the largest income falls (1%). Renters sit between the two.”