The UK is heading towards a decade of declining living standards unless urgent action is taken to reverse a worsening cost of living crisis, according to a new report from the Joseph Rowntree Foundation (JRF).
Published this month, the independent analysis paints a stark picture of what lies ahead for families across the country, warning that unless government policies change, real incomes will fall for the majority of households—particularly those on the lowest incomes. The poorest families are set to experience the sharpest drop in living standards by 2030, with widening economic inequality now viewed as a major risk to national wellbeing.
At the heart of the projected decline are three core factors: rising housing costs, stagnant wages, and the continued freezing of personal tax thresholds. Together, they are eroding household budgets at a faster pace than any relief measures currently in place.
Paul Kissack, Chief Executive of the Joseph Rowntree Foundation, said the report should serve as a wake-up call:
“The most disadvantaged families are already on the edge. If current trends continue, we will see a sharp rise in hardship that could have been prevented with the right leadership. A decade of decline is not inevitable—it’s a political choice.”
A growing crisis behind closed doors
The report offers a detailed breakdown of why living standards are falling and who will be hit the hardest. Private renters are facing significant cost pressures, with rents rising faster than inflation in many parts of the UK. The number of households spending more than 30% of their income on rent is at its highest level in over a decade.
At the same time, wages have stagnated, particularly in the lowest-paying sectors such as hospitality, retail, and social care. Adjusted for inflation, average real earnings have failed to recover to pre-2008 financial crisis levels.
With tax thresholds frozen, more low- and middle-income earners are being pulled into higher tax brackets—a phenomenon known as ‘fiscal drag’. Meanwhile, in-work poverty is rising, and even people in full-time employment are struggling to meet basic living costs.
The Foundation warns that unless urgent structural reform is introduced, more families will fall below the Minimum Income Standard—the level of income required to afford a basic, decent standard of living in the UK.
Impact on public services and the labour market
The decline in household income will have broader implications beyond individual families. The JRF warns that strained family finances lead to increased demand for public services, particularly in health and education.
Children in low-income households are more likely to face barriers to learning and development. At the same time, long-term financial insecurity contributes to poorer mental and physical health outcomes, placing even greater pressure on the NHS.
There are also consequences for the labour market. Economic insecurity is linked to lower job retention, reduced productivity, and a lack of investment in skills—all of which affect the UK’s ability to build a stable, future-ready workforce.
Recommendations for reform
In response to the findings, the Joseph Rowntree Foundation is calling for a range of policy reforms designed to halt the downward trend. These include raising housing benefit in line with real rent prices and expanding investment in affordable social housing.
The Foundation is also urging reforms to Universal Credit to better support working families and those between jobs. It recommends a review of frozen tax thresholds to reduce the tax burden on low earners and the development of a long-term plan for wage growth, especially in sectors with persistent pay inequality.
Paul Kissack added, “We need to reset the social contract. That means rethinking how we support families to thrive—not just survive—and ensuring our economic system works for everyone, not just those at the top.”
The road ahead
With a general election on the horizon and economic inequality climbing up the political agenda, the Joseph Rowntree Foundation’s report adds weight to growing calls for systemic change.
Think tanks, anti-poverty campaigners and public sector leaders have increasingly argued that economic hardship is not just a cost-of-living issue—it is a barrier to long-term national resilience and cohesion.
For employers, local authorities and organisations committed to inclusion and social justice, the findings are a powerful reminder that dignity, opportunity and stability must be the cornerstones of any vision for a fairer future.