Resolution Foundation projects three-year household income stagnation around 2024 election

The Resolution Foundation projected zero real growth in median non-pensioner household income in the 2024-25 election year, in a briefing published on 6 September 2023¹. With zero growth also projected for 2023-24 and 2025-26, the think tank described this as a three-year stagnation, following a sharp income fall in 2022-23¹.

For the lower-income half of the non-pensioner population, 2024-25 is projected to bring a 1 per cent real income hit overall, and an extra 300,000 people are projected to fall into absolute poverty next year¹.

The briefing also estimated that total interest on bank accounts, cash ISAs and other savings would reach £90 billion in 2024-25, or over £3,000 per household, up from just £5 billion in 2021-22¹. It found that the tenth of households with the most savings wealth would account for two thirds (65 per cent, or around £60 billion) of savings interest in 2024-25, receiving an average of £20,000 each, before tax, while the half of households with the lowest savings would receive only 2 per cent of total interest income, or around £100 each on average¹. Households aged 65-74 were projected to gain six times as much on average as those under 35¹.

On mortgage costs, the briefing said around half of the mortgage cost rise was still to come, while around 90 per cent would have fed through by Q4 2024¹.

Why it matters for households

The projections cover the years either side of the election expected in 2024. On the briefing's central estimate, the median non-pensioner household sees no real income growth across 2023-24, 2024-25 and 2025-26, after a sharp fall in 2022-23¹. For the lower-income half of the non-pensioner population, the projected effect in 2024-25 is a 1 per cent real income hit, with an extra 300,000 people projected to fall into absolute poverty next year¹.

Higher interest rates cut both ways. The briefing estimated that savings interest across bank accounts, cash ISAs and other savings would reach £90 billion in 2024-25, over £3,000 per household on average, but it found that this income is concentrated: the tenth of households with the most savings wealth would take 65 per cent of it, around £60 billion, averaging £20,000 each before tax, while the half of households with the lowest savings would receive 2 per cent, around £100 each on average¹. Households aged 65-74 were projected to gain six times as much on average as those under 35¹. On mortgages, around half of the cost rise was still to come, with around 90 per cent fed through by Q4 2024¹.

What happens next

The briefing sets out projections to 2025-26 and does not announce policy changes. It presents the likely living standards backdrop to a 2024 election¹. No further dated steps are reported in the briefing.