The Resolution Foundation published its Living Standards Outlook 2026 on 10 February 2026, forecasting that typical non-pensioner incomes will grow by 1.2 per cent in 2026-27, while families it calls "Unsung Britain" see gains of 4.7 per cent1.
The report defines Unsung Britain as the poorer half of non-pensioner households. It says incomes for that group have risen by an average of just 0.5 per cent a year since the mid-2000s, despite rising employment and a large reduction in low pay1. It attributes the stronger 2026-27 figures to above-inflation increases in Universal Credit and the removal of the two-child limit, and says families with children will see the largest gains, with relative child poverty falling materially over the year ahead1.
"we project that typical non-pensioner incomes will grow by 1.2 per cent in 2026-27, with much stronger gains of 4.7 per cent for families in Unsung Britain"
The report sets the short-term improvement against a weaker longer-run picture. It cites Office for Budget Responsibility expectations that average incomes will grow by only 0.3 per cent a year over the rest of the decade, and says weak real wage growth, frozen tax thresholds and rising Council Tax and housing costs mean incomes are projected to stagnate again later in the decade1.
| Measure | 2026-27 forecast |
|---|---|
| Typical non-pensioner incomes | 1.2 per cent growth |
| Unsung Britain (poorer half of non-pensioner households) | 4.7 per cent growth |
| Average incomes over rest of decade (OBR) | 0.3 per cent a year |
The report makes three recommendations: prioritising productivity growth to support real wage increases; linking Local Housing Allowance for private renters to actual rents and introducing consistent indexation so working-age benefits and the state pension are uprated in line with earnings; and direct action on energy bills and Council Tax1.
Why it matters for households
The forecasts cover the 2026-27 financial year, so the income changes described would apply from April 2026. The report links the larger gains for lower-income families to two specific mechanisms: above-inflation uprating of Universal Credit and the removal of the two-child limit1. Families affected by the limit, and those receiving Universal Credit, are therefore the households where the report expects the biggest change in disposable income.
The report also says relative child poverty is set to fall materially over the year ahead, with families with children seeing the largest gains1. Relative poverty is measured against the incomes of others, so a fall can occur when the incomes of lower-income households rise faster than the average, which is the pattern the report describes for 2026-27.
Beyond that year, the report expects the improvement to fade. It points to frozen tax thresholds, meaning more of any pay rise is taken in tax as earnings rise, alongside rising Council Tax and housing costs1. Households whose income comes mainly from work rather than benefits would see less benefit from the 2026-27 measures, since the report attributes the boost to benefit uprating and the two-child limit change rather than to wage growth.
What happens next
The report does not set out a timetable for the measures it describes beyond the 2026-27 financial year. The uprating of Universal Credit and the removal of the two-child limit are referred to as planned changes1. The report's recommendations on Local Housing Allowance, benefit indexation and cost of living pressures are proposals, and no implementation dates are given1.
Sources1 cited
- Living Standards Outlook 2026 • Resolution Foundation resolutionfoundation.org
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