Middle East warfare threatens dwelling requirements development in UK for poorest households
Overnight analysis by the Resolution Foundation of the Spring Statement found the nation is set for an increase in living standards this year, but conflict in the Middle East could see energy prices soar
The conflict in the Middle East could see energy prices soar(Image: AP)
War in the Middle East threatens a growth in UK living standards for lower-income families, a think tank has warned.
Overnight analysis by the Resolution Foundation of the Spring Statement found the nation is set for an increase in living standards this year, but the impact of conflict in the Middle East could see energy prices soar.
The Chancellor Rachel Reeves announced no new policies yesterday, but said her fiscal plan was “more necessary than ever before in a world of uncertainty” with the Iran conflict threatening economic stability. But the Office for Budget Responsibility indicated GDP will increase by just 1.1% in 2026, down from the 1.4% it forecast in November. The watchdog upgraded its forecasts for 2027 and 2028 from 1.5% to 1.6%.
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READ MORE: Rachel Reeves makes Spring Statement vow to families as Iran crisis threatens economy
Looking at the plans, the Foundation forecast living standards for typical working-age families would grow 0.9%, or £300, over the coming year (between 2025-26 and 2026-27). It was even better news for lower-income households, living standards are set to grow by 3.9 %, or £800. This would be the second strongest year for living standards in the past two decades for poorer families. It comes after ministers scrapped the cruel two-child limit, and brought in the first ever permanent above-inflation increase in the basic rate of Universal Credit.
However, the Foundation also suggested the boost might only be short-term, with incomes of typical working-age families projected to fall by 0.5%, or £150, for the remaining two years of the Parliament (2026-27 to 2028-29). The Foundation also warned any progress risks being overshadowed by the domestic fallout from events in the Middle East. They claim if recent rises in the price of oil and gas were to be sustained they could add around a 1% to inflation and £500 on to typical annual energy bills.
Ruth Curtice, Chief Executive at the Resolution Foundation, said: “The immediate economic outlook for Britain is highly uncertain, with yesterday’s forecasts already looking out of date, while the living standards picture for the rest of the Parliament is very lopsided. This coming year is set to be a decent one for living standards, and a bumper one for poorer families, as wages and benefit support rise above the level of inflation. But a fresh energy price shock risks puncturing this good news.
“With wage growth set to tail off, the living standards picture for the rest of the Parliament is bleak. This should remind policy makers of the need to both navigate near-term uncertainty and support productivity-based economic growth over the medium term. That is the only way to meaningfully lift living standards throughout Britain.”
