New official statistics have confirmed a stark decline in British living standards, with the average person now having significantly less money to spend each month than they did six years ago.
A Sustained Decline in Spending Power
According to updated data released by the Office for National Statistics (ONS) on Monday 22 December 2025, disposable income is now more than £20 a month lower than it was in December 2019 after adjusting for inflation. This critical measure of financial wellbeing, defined as the money people have left after taxes and benefits, has now fallen for three consecutive quarters.
The figures show a particularly sharp recent drop, with the average person having £38 less to spend each month after tax compared to the end of 2024. Even more strikingly, disposable income is now £1 lower per month than it was in the summer of 2019, marking the parliament between December 2019 and July 2024 as the first in recorded British history to oversee a real-terms fall in disposable income.
Historical Context and Economic Shocks
This sustained drop places the current period among rare historical declines. Since the 1950s, there have been only five other occasions where disposable income fell for three quarters in a row. Three of those were in the 2010s, with others occurring in the early 1960s and late 1970s.
Simon Pittaway, Senior Economist at the Resolution Foundation, told Sky News that the data confirms Britain's "mini living standards bounce in 2024 is well and truly over." He pointed to a deeper structural issue: "Britain's big problem is that the country experienced three once-in-a-generation economic shocks in less than two decades." He identified these as the 2008 financial crash, Brexit, and the combined cost of living crisis and COVID pandemic.
Pittaway added that people in their mid-to-late 30s have spent their entire working lives moving from one national crisis to another, hindering long-term financial progress.
Government Response and Future Outlook
A spokesperson for the Prime Minister responded to the figures by highlighting government actions aimed at mitigating the pressure. They noted that real wages have risen more in the last year than in the first decade of the previous government, and pointed to budget measures including help with energy bills, prescription fees, and rail fares.
The spokesperson also cited six interest rate cuts since the election and rises to the National Living Wage, which they say gives full-time low earners £900 more a year. They stated the economy has grown faster than expected this year and most forecasts have been upgraded.
However, analysis from the Joseph Rowntree Foundation projects that living standards will fall by £850 a year over the course of this parliament. They noted that while actions like lifting the two-child benefit cap would make the decline "less painful" for low-income households, frozen tax thresholds mean many will pay thousands more in real terms by the next election.
Despite three quarters of decline, living standards remain higher overall since Labour took office, following rapid growth in their first six months. Britain is currently the fourth-fastest growing G7 economy, behind the United States, Japan, and Canada.
