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Living standards, poverty and inequality in the UK: 2017–18 to 2021–22

Debates over living standards, poverty and inequality in the UK are often hampered by the fact that official data on household incomes are available only with a significant lag. Currently, the latest statistics are for 2015–16. In this report, we attempt to fill this gap by estimating what has happened since 2015–16 to household incomes and poverty rates. We also look at how they might evolve up to 2021–22 if current tax and benefit policy plans are kept to and if the macroeconomic forecasts from the Office for Budget Responsibility (OBR) – for things such as earnings and employment – were correct. There is, of course, significant uncertainty around any macroeconomic forecasts, and hence around any projection of future trends in household incomes based on those forecasts. Notably, the OBR has already indicated that it will downgrade its forecast for productivity – the key driver of earnings – at the Budget later this month. Such a downgrade would leave our projections for median income (based on the OBR’s March forecast) looking optimistic. However, our poverty projections, and those for relative poverty in particular, are less sensitive to forecast earnings growth.

We also report projections at a regional level and indicate what characteristics of those regions drive different projected trends in poverty rates. Further, we project how the government’s planned direct tax and benefit reforms are likely to affect poverty rates across the country.