The Living Standards Outlook – Summer 2023 Update

Household incomes are always a crucial perspective on how living standards are changing, particularly during economic crises. And in democracies, changing living standards also matter for politics, particularly ahead of elections. As Ronald Reagan famously put it in 1980, the answer to “are you better off today than you were four years ago?” is often an important bit of context for voters. In the UK, it mattered that David Cameron had the backdrop of a low energy cost living standards mini-boom in 2015, while Theresa May triggered an election during a period of falling real pay in 2017. 

The past year has seen the biggest inflation shock in four decades, continued emergency policy interventions, and a rapid tightening of monetary policy. This briefing note takes stock of where this leaves household incomes, and considers what the year ahead – as well as the first year of the next parliament – may have in store. As such, it presents the likely living standards backdrop to a 2024 election.