In the News Teaching Activity – are people on low to middle incomes in the UK worse off than those in other countries? (Jan 2025)

A study by the Resolution Foundation reveals that low- to middle-income families in the UK are significantly poorer than their counterparts in western Europe.

High housing costs are exacerbating income inequality and poverty for low- to middle-income families in the UK, leaving them 39% poorer than their Dutch counterparts and £2,300 worse off than similar households in Germany. Despite food being 12% cheaper than the OECD average, housing costs in Britain are 44% higher, consuming nearly a quarter of lower-income families’ budgets. Rising property prices, up over 25% in five years, and escalating rents—up 9.1% in the year to November 2024—worsen affordability. Economists argue that building more affordable homes and enhancing rental support are critical to addressing this crisis.

UK low- to middle-income families far poorer than OECD counterparts – study | OECD | The Guardian

1. How do high housing costs impact the disposable income of low- to middle-income families in the UK compared to their European counterparts?

2. Discuss why lower-income households in the UK spend a larger proportion of their income on housing compared to necessities like food, despite food being cheaper than the OECD average.

3. Using supply and demand theory, analyse how the UK’s housing market dynamics contribute to long-term income inequality and reduced economic mobility for low-income families.