Between December 2019, when Boris Johnson won the general election, and July 2024, when Rishi Sunak's Conservative government was defeated, the average monthly disposable income per person in the UK fell by £40. This decline marks a historical first in British records—disposable income at the end of a parliamentary term being lower than at its start, according to a detailed analysis by Sky News Data x Forensics drawing on Office for National Statistics updates. Disposable income, the amount left after taxes and benefits, must cover essential expenditures like housing costs, council tax, food, and energy bills. These essential costs have risen faster than overall inflation since 2019, exacerbating the squeeze on household budgets, especially for lower earners who dedicate a larger share of their income to essentials. Economists such as Lalitha Try from the Resolution Foundation describe this as “an unmitigated disaster for living standards,” warning of an urgent need for a catch-up boost in household incomes coupled with broader economic growth to reverse the damage.

Under the Labour government, which took office in July 2024, there was an initial uplift in disposable income, rising by £41 per person per month. This early improvement partly reflected public sector pay rises negotiated during the previous Conservative administration and continued positive trends from the final months of the outgoing government. In the first six months of Labour’s term, disposable income increased by £55, a rate higher than any comparable period under the Conservatives. However, this progress has not been sustained, with recent months showing a reversal trend. By early 2025, average disposable income had dropped by £14 per month compared to the start of the year. The Joseph Rowntree Foundation projects that by September 2029, disposable income will be £45 per month lower than when Labour took office, factoring in housing-related costs. Labour’s promise to improve living standards across the UK remains ambitious but cautious; economist Sam Ray-Chaudhuri from the Institute for Fiscal Studies points out that even achieving income growth over the parliamentary term would still represent recovery from a recent period of stagnation rather than marked improvement.

Economic context spanning the last two decades reveals that the UK’s income growth has lagged behind comparable economies. Between 2007 and 2019, median incomes in the UK grew by only 6%, trailing the US (12%) and Germany (16%). This period, largely dominated by Conservative governments, saw relative economic underperformance that has continued post-pandemic. Among a group of 14 advanced economies, only France, Spain, and Greece experienced worse income growth trajectories than the UK, according to data analysed by the Institute for Fiscal Studies.

More recent economic indicators reinforce the financial challenges faced by many UK households. By mid-2025, 60% of families reported a decline in disposable income, marking the first such drop among middle-income households since late 2023. Inflation surged to 3.8% in July 2025, its highest level that year, driven by rising costs in food, drink, and transport. Lower-income households have been especially impacted, experiencing an 11.1% fall in spending power and an average weekly shortfall of £74 between earnings and essential costs. Credit and debt concerns loom large as well; the Trades Union Congress reports that unsecured debt per household is expected to rise by about £1,400 in real terms, and real wages are not forecast to recover to their 2008 levels until 2028. This combination of stagnant wages, rising living costs, and increasing debt underscores the deep financial pressures confronting many families.

Looking ahead, there are concerns that persistent inflationary pressures, particularly from energy prices, could further constrain household spending. Surveys conducted by Asda in late 2024 and mid-2025 indicate that disposable income remains tight, with inflation peaking and eroding purchasing power. The festive season, traditionally a period of increased consumer spending, may see subdued activity due to these financial constraints.

Both the Conservative and Labour parties have been approached for comment on these findings but have not responded. The Resolution Foundation and other economic research bodies highlight that without significant policy intervention to support economic growth and income improvement, the pressure on UK living standards may intensify further. Labour’s pledge to prioritise living standards improvement is critical, yet the scale of the challenge reflects years of underperformance and external shocks that require coordinated and sustained efforts to overcome.

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Source: Noah Wire Services