Growth in living standards threatened by war in Middle East

06 Mar 2026

The UK is set for a decent increase in living standards this year but energy price shocks caused by war in the Middle East threaten that growth, according to the Resolution Foundation.

The think tank says the improvement in living standards would be a one-off and would particularly benefit lower-income families.

However, the medium-term picture for living standards remains bleak, it adds.

The Foundation says living standards for typical working-age families are set to grow by a decent 0.9 per cent, or £300, over the coming year.

However, the think tank says this good news risks being overshadowed by the domestic fallout from events in the Middle East. If recent rises in the price of oil and gas were sustained, they could add around a percentage point to inflation and £500 on to typical annual energy bills, it adds.

Ruth Curtice, Chief Executive at the Resolution Foundation, said: 'This coming year is set to be a decent one for living standards, and a bumper one for poorer families, as wages and benefit support rise above the level of inflation. But a fresh energy price shock risks puncturing this good news.

'With wage growth set to tail off, the living standards picture for the rest of the Parliament is bleak. This should remind policy makers of the need to both navigate near-term uncertainty and support productivity-based economic growth over the medium term. That is the only way to meaningfully lift living standards throughout Britain.'