Hard-working households across the United Kingdom are projected to suffer a severe blow to their finances, with a real-terms reduction in spending power exceeding £15,000 by the year 2029.
Budget Fallout Hits High Earners Hard
The stark forecast follows the Autumn Budget delivered by Labour Chancellor Rachel Reeves. An in-depth study by investment platform IG analysed the cumulative impact of frozen tax thresholds, welfare measures, and government spending choices across all income levels until the end of the 2028-29 Spending Review period.
It reveals that so-called 'HENRY' households – High Earners Not Rich Yet – are set to be disproportionately affected. These typically younger workers face the steepest decline in what their money can actually buy.
The Numbers Behind the Squeeze
The research provides a detailed breakdown of the impending financial pressure. Workers in the ninth income decile, who typically take home around £65,700 annually, can expect their real purchasing power to fall by £8,935 over the coming years.
For those at the very top of the earnings scale, the picture is even more severe. Individuals with average salaries of £103,700 are projected to see a staggering reduction of £15,658 in their spending power by 2029.
Analysts Point to Policy 'Freeze' and Fear
Chris Beauchamp, chief market analyst at IG, commented on the findings. He noted that while the Chancellor met her fiscal rules and avoided direct hikes to income tax or national insurance, the combination of policy measures and frozen thresholds will have a sharply negative effect.
"As the name suggests, many in these income bands carry high living costs and wouldn't recognise themselves as 'rich'," Beauchamp added, highlighting the particular strain on HENRY households.
The economic uncertainty preceding the Budget also had a tangible dampening effect. Dan Coatsworth, head of markets at AJ Bell, stated that constant speculation about potential tax rises led consumers and businesses to rein in their spending during October.
"A worse than expected GDP figure is the result of a country going into a freeze, fearing that the Chancellor would hike taxes and leave less money in people’s pockets," Coatsworth explained. He further warned that November's GDP data could be equally gloomy, as the Budget did not happen until the end of that month.
This presents a significant political challenge for Chancellor Rachel Reeves, who placed economic growth at the centre of her Budget strategy. The lacklustre economic data contradicts hopes for ending 2025 with strong momentum and optimism heading into 2026.
