Britain’s leading economic think tank says households are facing a “truly dismal” rise in spending power following the Chancellor’s Budget.
The Institute for Fiscal Studies warns that disposable income is expected to grow by just 0.5% a year over the next five years — far below the historic average of 2% annual growth.
Chancellor Rachel Reeves has defended her decisions, including freezing income tax thresholds until 2031 and introducing new levies on electric vehicles, pensions, and high-value homes. She insists the measures are “fair and necessary” and do not break Labour’s election pledges.
But critics say the freeze will push more people into higher tax brackets as wages rise, with the IFS estimating that 700,000 more people will pay income tax and one million will move into higher-rate bands by 2031.
The Budget also includes support measures such as scrapping the two-child benefit cap and cutting energy bills, but the overall impact on household finances remains bleak.
