14th July 2026
For many people, the biggest question about the economy is not whether GDP is growing or whether inflation has fallen.
It is much simpler:
"Am I better off than I was a few years ago?"
A new report from the Joseph Rowntree Foundation (JRF) argues that, for millions of households, the answer is still no.
The report, "Rebuilding living standards and economic security", warns that another wave of economic shocks, including the impact of conflict in the Middle East and continuing pressures on housing and energy costs, risks leaving many households struggling to improve their financial position.
The JRF argues that action on housing, energy, social security and insecure employment could significantly improve household finances and rebuild economic security.
The Cost of Living Crisis Has Not Really Ended
Although inflation has fallen from its peak, the report highlights an important point:
Lower inflation does not mean prices have returned to where they were.
Food, energy, rents, mortgages and everyday essentials remain much more expensive than before the recent inflation shock.
Many households are now coping with a permanently higher cost base.
The JRF argues that the result is a prolonged squeeze on living standards, particularly for lower-income families who have less ability to absorb rising costs.
The Poorest Households Face the Greatest Pressure
According to the report, the lowest-income households are expected to experience the greatest difficulties.
JRF estimates that the incomes of the poorest fifth of households could fall during this parliamentary period, leaving them significantly worse off compared with where they would have been if previous trends had continued.
However, the report also points out that the pressure is not limited to those officially classified as poor.
Many working households are also feeling financially insecure because housing costs, energy bills and essential spending take up an increasing share of their income.
Energy Costs Remain a Major Concern
Energy is one of the central themes of the report.
The past few years have shown how vulnerable households can be when international events send energy prices sharply higher.
For rural areas such as Caithness, where many homes rely on heating oil, electricity or other alternatives to mains gas, energy security is a particularly important issue.
The JRF argues for an approach that guarantees affordable basic energy for households, ensuring that people can heat their homes without facing impossible choices between energy, food and other essentials.
Housing Costs Are Becoming a Bigger Problem
Housing is another major concern.
The report highlights rising private rents and argues that housing costs are one of the biggest barriers to improving living standards.
The JRF recommends measures including controlling excessive rent increases and ensuring housing support better reflects the reality of local rental markets.
This issue affects both cities and rural areas.
In places like the Highlands, limited housing supply, tourism pressures and demand for rental properties can make finding affordable accommodation difficult for local workers and young families.
The JRF's Proposed Solutions
The report argues that government can improve living standards through reforms in several areas:
Making housing more affordable.
Ensuring households have access to affordable energy.
Strengthening the safety net provided through Universal Credit.
Providing better protection when people experience illness, caring responsibilities or other income shocks.
Improving economic security for people in insecure employment.
The organisation argues that these changes would require investment but could also reduce pressure elsewhere by preventing families falling into deeper financial difficulty.
The Big Economic Challenge
The report raises a wider question about Britain's economic model.
The UK economy may avoid recession, unemployment may remain relatively low and inflation may continue falling, but that does not automatically mean households feel better off.
This links closely with recent economic data showing a country that is resilient but experiencing weak growth.
An economy can be stable while many people still feel financially squeezed.
What Does This Mean for Scotland?
The issues raised by JRF are particularly relevant in Scotland.
The Scottish Government has responsibility for some important areas, including housing, local government and parts of social policy, but many major economic levers remain controlled at Westminster.
Scotland faces additional challenges:
higher costs of living in remote rural areas;
expensive transport links;
limited housing availability in many communities;
dependence on energy for heating;
an ageing population putting pressure on public services.
For communities such as Caithness, economic security is not just about wages. It is also about whether people can afford to live locally, heat their homes and access essential services.
The Bottom Line
The Joseph Rowntree Foundation's message is clear:
Economic recovery is not meaningful unless people feel the benefits in their daily lives.
The UK economy has shown resilience through major shocks, but many households remain financially fragile.
The challenge for governments is moving beyond simply managing crises and creating the conditions where ordinary families can once again feel confident about the future.
For many people, the true measure of economic success will not be the latest GDP figure.
It will be whether there is money left at the end of the month.
JRF - Rebuilding living standards and economic security