Outlook for UK Households, the Devolved Nations and the English Regions

As incomes fail to keep up with prices, households have run down their savings: we project that the number of households with no savings is set to double by 2024, rising to around 5.3 million (20 per cent of all households; see Box C). The cost-of-living crisis will have persistent effects upon the hardest hit households: soaring bills for basic necessities mean that the number of households living 'pay cheque to pay cheque' (i.e., having savings worth less than two months' disposable income) will nearly double from around 3.9 million (14 per cent of households) in 2023 to approximately 6.8 million (26 per cent) by 2024. The support measures announced in May cushioned the worst effects of rising inflation (see Box E) but are insufficient to protect around 11 million low-income households from the coming headwinds; more than 10 per cent of these households, about 1.2 million, will experience destitution as they see food and energy bills exceeding their disposable income, so will need to choose between eating and heating. As the energy price cap is lifted in October and food prices continue to soar, we renew our call for a Universal Credit uplift of £25 per week for at least six months from October 2022 to March 2023 and an increase in the energy grant from £400 to £600 for 11 million low-income households. Regional disparities are deepening as London continues to power ahead while the West Midlands, and parts of Wales and Scotland fall further behind: the Towns Fund of £4.8bn and other Levelling Up funding streams need to be at least doubled to stimulate growth in the devolved nations and English regions outside London and the South-East and unlock greater private investment. On balance Northern Ireland has benefitted from the Protocol compared with the counterfactual of not having access to the EU single market and customs union: but the heightened uncertainty over new legislation and political paralysis in Stormont and Westminster raise the prospect of diminished growth, and low productivity remains a particular problem for the Northern Irish economy (Box D).