The cost of living in Britain

Living in Britain is becoming increasingly hard for poorer families, according to new research from the Resolution Foundation.

While food prices may be relatively low, the steep cost of housing is making it especially difficult for those with limited incomes.

High prices, low wages

The report, titled Whose price is it anyway?, compares spending power among low-to-middle income families in Britain with those in other advanced economies, such as Germany, the Netherlands and France.

The findings are stark:

• Overall prices in the UK are 8% higher than the average recorded for Organisation for Economic Co-operation and Development (OECD) countries
• Housing costs are a staggering 44% above the OECD average.
• Food is 12% cheaper than the OECD average, thanks to certain VAT exemptions.

Spending patterns matter

Lower-income households have different spending habits than those who are better off.

A larger portion of their budget goes on essentials, rather than luxuries:

• 22% on housing (versus 13% for wealthier families)
• 17% on food (compared to 13% for those with more money)

Growing income gaps

These differences mean the income gap between poorer British families and their European counterparts is widening.

For example:

• Poor German families are 16% better off than their British peers.
• This gap increases to 21% (£2,300 a year) when adjusting for typical spending patterns.
• For Dutch families, the gap is 39%.
• With French families, it sits at 8%.

A call for change

Simon Pittaway, senior economist at the Resolution Foundation, says Britain's housing crisis significantly contributes to child poverty and income inequality.

“Britain’s housing costs crisis is a major driver of child poverty, and contributes to poor families being £2,300 worse off than their German counterparts.

“The crisis needs to be tackled urgently – from building more affordable homes to providing better support for low-income renters,” Pittaway said.

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