Claims that the Office for Budget Responsibility (OBR) has forecast falling living standards every year have been challenged by the latest figures.
Responding to the Budget on Wednesday, Opposition leader Kemi Badenoch claimed the OBR had forecast “real household disposable income: lower every year”. Robert Jenrick, Reform UK’s Treasury spokesman, made a similar claim on GB News on Thursday. Speaking of the Chancellor, Mr Jenrick said: “By his own figures he’s saying that living standards for people in this country will decline every single year for the next five years.”
What the OBR forecast shows
The OBR’s forecast sees real household disposable income (RHDI) – the measure both politicians are likely referring to – fall this year, but rise in each subsequent year until 2031. Compared with its previous forecast in March, RHDI annual growth has been downgraded in some years and upgraded in others. However, thanks to the fall in 2026, RHDI is lower in each year of the forecast than the OBR had previously estimated. It appears this is what Mrs Badenoch was referring to.
It is unclear what Mr Jenrick was referring to, as there does not appear to be any measure in the OBR forecast by which living standards decline every single year.
The facts behind the claims
The OBR calls real household disposable income “a useful though incomplete measure of living standards”. According to the OBR’s report, RHDI is forecast to fall by 0.6% in 2026, then rise by 0.2% in 2027, 0.9% in 2028, 0.7% in 2029, 1.1% in 2030, and 1.0% in 2031.
Compared with its March 2026 forecast, RHDI annual growth was downgraded by 1.3 percentage points this year and 0.5 points in 2027. It was upgraded by 0.2 percentage points in 2028 and 2030, while there was no change to the 2029 forecast. There was no previous forecast for 2031.
Chart 2.6 in the OBR report shows that compared with March’s forecast, RHDI in this forecast is lower each fiscal year than previously expected, because of the falls early on in the forecast. This is what the Conservative Party pointed to when asked to clarify Mrs Badenoch’s comment.
RHDI falls in 2026, but rises each of the next five years – growing by £766 to 2031. However, compared with the March forecast, RHDI will be £356 lower in 2026 than previously thought, and £250 lower in 2030. These figures are all in constant 2023 prices.
Alternative measures of living standards
The OBR calls real GDP per person “an indicator of average living standards”. This increases in every year of the forecast, with the lowest rise over the period being 0.9% in 2027 and the highest 1.6% in 2029. Average real earnings – both weekly and hourly – also rise in every year of the OBR’s forecast, apart from a dip in 2027.
Reform UK has been contacted to clarify Mr Jenrick’s comments.
