Nearly a decade after the referendum that set the UK on the path out of the European Union, the economic consequences of Brexit are increasingly visible in the day-to-day lives of ordinary people. New data on living standards shows that households are under sustained pressure, with disposable incomes stagnating or falling, and Brexit standing out as one of the defining shocks behind this decline.
The average person in the UK now has around £38 less to spend each month after tax than they did at the end of 2024. This follows three consecutive quarters of falling living standards, a rare and troubling pattern in modern British economic history. Disposable income – the money left after taxes and benefits, which must cover essentials like housing, food, energy and council tax – is now lower than it was before the pandemic and even before Brexit.
According to updated figures from the Office for National Statistics, disposable income is £1 lower per month than in summer 2019 after adjusting for inflation, and more than £20 lower than in December 2019, just weeks before the UK formally left the EU. These declines come despite repeated political promises to raise living standards across all parts of the country.
A historic squeeze on living standards
The period between December 2019 and July 2024 marked a grim milestone: it was the first parliament in recorded British history to oversee a fall in real disposable income. While the UK has experienced downturns before, the scale and persistence of this squeeze is unusual.
Before 2022, there had been only one five-year period in which living standards fell – between 2008 and 2013, following the global financial crisis and the austerity measures that followed. Since the 1950s, there have been only five occasions when disposable income fell for three consecutive quarters. Strikingly, three of those occurred in the 2010s, highlighting how the past decade has been uniquely punishing for households.
The longest sustained fall in living standards – five consecutive quarters between December 2015 and March 2017 – coincided directly with the Brexit referendum and its immediate aftermath. That period was marked by a sharp fall in sterling, rising import prices and a collapse in business investment, all of which fed through to household budgets.
Brexit as a lasting economic shock
Economists increasingly describe Brexit not as a one-off event, but as a permanent drag on the UK economy. Simon Pittaway, senior economist at the Resolution Foundation, argues that Brexit should be seen alongside the 2008 financial crash and the COVID-era cost-of-living crisis as one of three “once-in-a-generation” shocks to hit the country in less than 20 years.
For many people in their mid-30s and early 40s, this has meant an entire working life shaped by instability: weak wage growth, repeated price shocks, and limited improvements in living standards. Brexit has contributed by reducing trade intensity, increasing bureaucracy for exporters, shrinking the labour market, and dampening long-term productivity growth – all of which ultimately constrain wages and public finances.
Political promises versus household reality
Improving living standards has been one of the government’s most high-profile economic targets ahead of the next election. Ministers point to recent wage growth, increases in the national living wage, and support with energy bills, transport costs and prescription fees. They also highlight falling inflation and a series of post-election interest rate cuts designed to support borrowing and spending.
However, these measures sit alongside frozen tax thresholds, which are quietly pulling millions of people into higher tax bands. By the end of this parliament, many households – including low earners – will be paying thousands of pounds more in real terms than they do today, offsetting much of the apparent wage growth.
Anti-poverty groups remain pessimistic. Following November’s budget, the Joseph Rowntree Foundation projected that living standards would still fall by £850 a year over the course of this parliament. While some policies, such as changes to benefit rules, may soften the blow for the poorest households, they do not reverse the underlying trend.
The legacy of Brexit
Britain’s living standards crisis cannot be blamed on Brexit alone. Global inflation, energy shocks, COVID-19 and geopolitical instability all play a role. But Brexit has made the UK more vulnerable to those shocks, leaving the economy less flexible and less productive than it would otherwise have been.
As Pittaway notes, the challenge now is to avoid further self-inflicted economic damage and focus on rebuilding growth. Without that, the promise made during the Brexit campaign – that leaving the EU would make people better off – will continue to ring hollow for a public that feels poorer, squeezed and increasingly disillusioned.
For many households, Brexit is no longer an abstract political debate. It is felt every month, in the gap between wages and bills, and in a standard of living that has yet to recover to where it stood before the UK chose to leave the European Union.
