UK Households Feel the Squeeze: What's the Deal with Disposable Income?

The UK government's recent budget has left many households feeling the pinch. Experts are saying that the amount of money people have to spend after taxes, called disposable income, is only going to grow by a tiny 0. 5% each year for the next five years. That's not great news for anyone trying to make ends meet. One big reason for this is that National Insurance, a type of tax, is going up. This is happening because the government has put a limit on how much can be put into pensions and has frozen tax thresholds. Some people think this goes against promises made before the last election. The prime minister, though, says everyone needs to chip in to help the country. The Institute for Fiscal Studies (IFS) thinks this slow growth in disposable income is especially bad when you compare it to the past. From the 1980s to the 2000s, income grew by more than 2% every year. Now, it's expected to go up by only about £104 a year for the next four years. The IFS also points out that the UK was already dealing with slow economic growth and high living costs before this budget. And guess what? Not much has changed. Another group, the Resolution Foundation, agrees and says that the growth in living standards from this budget will be one of the worst ever recorded. The chancellor, Rachel Reeves, has made some choices that will affect working people. She froze income tax thresholds for another three years and put a cap on pension contributions. She says these changes are necessary to help the NHS, reduce poverty, and lower living costs. But some people are not happy about these changes, saying they break promises made before the election. Before the budget, there was a lot of talk about the UK's financial situation. The chancellor had to deal with big gaps in meeting financial rules, which made financial markets uncertain. But the Office for Budget Responsibility (OBR) says the overall forecast isn't that bad, and there's no huge financial mess to clean up. Experts like Helen Miller from the IFS think the government could be doing more to boost the economy. She says the government should reform the tax system and work on other areas like competition policy, regulation, and education. Miller also thinks the government should focus more on driving up economic growth, which is supposed to be their top priority.