The figures come from new projections produced by the fiscal watchdog, the Office for Budget Responsibility.
The figures come from calculations produced by the Office for Budget Responsibility (OBR), which is forecasting that households will be £500 per year better off in 2029/30 than it was forecasting at the time of the last Budget.
Across 2025, average nominal wage growth is 0.7 percentage points higher than the October forecast.
But at the same time, it points out that this growth is very uneven over the next five years.
The reason growth is so slow during this period is a combination of low wage rises – partly due to National Insurance rises announced last October, the cuts to benefits announced on Wednesday, and the freeze on income tax thresholds that is expected to run until 2028.
Martin Lewis, founder of consumer website MoneySavingExpert.com, wrote on social media: “Most of [the increase] comes in the last two years, after drops first, and is based on assumptions that some of current tax proposals, such as freezing tax thresholds will end.”
Who are the winners and losers?
Given that wage growth is set to be the biggest driver of disposable income growth – the amount people have to spend – and benefits are set to be cut, some experts believe that richer households will be the biggest winners from the changes.
Arnab Bhattacharjee, research lead for regional modelling and microsimulation at the National Institute of Economic and Social Research, said: “The Chancellor claimed working households will be better off by about £500 on average in 2025/26.
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“With no substantial initiatives targeting low-income households, the living standards and living conditions of the working poor will continue to stagnate.”
Edward Jones, professor of economics at the University of Bangor, said: “I suspect it won’t be evenly distributed and I fear that those who really need the help won’t get to benefit from being £500 better off.
The Government’s own analysis even suggests that benefits cuts will see an extra 250,000 people – including 50,000 children – pushed into relative poverty.
“Almost 4 million households on universal credit, who do not receive the health element, will gain an average of £265 a year.”
Ruth Curtice, chief executive at the Resolution Foundation, said: “While the Chancellor was right to balance the books, she was wrong to do so on the backs of low-to-middle income families, on whom two-thirds of the welfare cuts will fall. Over three million households will be worse off as a result of welfare changes.”
Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “This government says it wants to drive up living standards and fight child poverty, but you can’t do that while taking a wrecking ball to the support people rely on.
“These looming benefit cuts will drive even more people into poverty, not lift them up. This isn’t just a spreadsheet. We’re talking about real lives, real people, real struggles.”
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