Millions of Britons face "recession level" falls in income over the next five years due to Labour's cuts to health-related benefits, the Resolution Foundation has warned.
The think-tank said on Thursday that the cuts confirmed in Rachel Reeves's Spring Statement will hit some of the most vulnerable people in the country.
The chancellor has chosen to "concentrate the pain" of her fiscal consolidation on sick and disabled benefit claimants, according to the Resolution Foundation.
This comes as the government implements £8.3billion annual cuts to health-related benefits, though this is partially offset by other welfare measures.
James Smith, the think-tank's research director, said the policy decisions would contribute to "recession level" falls in living standards for households in the bottom half of the income distribution.
This comes as the government implements £8.3bn annual cuts to health-related benefits
GETTYTheir disposable income after housing costs would fall by an average of three per cent, or £500, over five years, the think-tank estimated.
This marked "a really tough, recession-like outlook for living standards... similar to the 2000s or 1990s", Smith said, calling it "a really bleak outlook".
The overall outlook for living standards would also be affected by low real wage growth, higher rents, council tax and water bills.
There would also be an ongoing squeeze on other areas of welfare.
The Resolution Foundation said growth of 0.6 per cent in households' real disposable incomes over the course of the parliament would make it one of the weakest parliaments on record.
Reeves shared multiple DWP reforms in her Spring Statement
GETTYSmith said: "The 2020s are looking like a disaster of a decade, even relative to the two preceding it, in terms of living standards. It is worse if you zero in on the bottom half."
The decade has so far included the Covid-19 pandemic, a period of high inflation, and elevated energy costs.
Reeves said on Wednesday she would save £4.8bn from the welfare budget by 2029-30 by cutting health-related benefits while increasing unemployment benefits.
She claimed this was offset by another £1.4bn spent on schemes to get people back into work, meaning a net saving of £3.4bn.
But the Resolution Foundation said the cuts that some of the poorest families would experience were much larger than the net figure presented by the fiscal watchdog suggested.
Gross cuts to spending on disability and incapacity benefits total £8.3bn, with the OBR setting against this a £1.9bn increase in spending on basic jobless benefits.
The think-tank noted this approach was correct "in strict scorecard terms" but would never be felt as a positive impact by households.
Reeves defended her approach on Wednesday, stating that household income was set to grow in 2025 at twice the rate expected at the autumn Budget.
She claimed people would be "£500 a year better off under this government".
The chancellor has also argued that estimates of the impact of the welfare cuts have not taken into account the benefits of the government's back-to-work programmes
GETTYThe chancellor has also argued that estimates of the impact of the welfare cuts have not taken into account the benefits of the government's back-to-work programmes.
This defence comes as the Resolution Foundation's analysis suggests the poorest families will face significant income reductions over the coming years.
The think-tank's findings paint a concerning picture for vulnerable households despite the government's optimistic economic forecasts.
