{
  "id": 10880008,
  "title": "UK disposable income rises as benefits payouts soar ahead of wages",
  "url": "https://urgent.news/2026/09/30/uk-disposable-income-rises-as-benefits-payouts-soar-ahead-of-wages",
  "topic": "business",
  "section": "Business",
  "published": "2026-09-30T06:32:49.000Z",
  "source": {
    "name": "City AM",
    "slug": "city-am",
    "url": "https://www.cityam.com/uk-disposable-income-rises-as-benefits-payouts-soar-ahead-of-wages/"
  },
  "original_language": "en",
  "account": "In the second quarter, the average UK household's disposable income surged, primarily due to a significant rise in benefit payouts. Real household disposable income per head climbed by one percent to £6,577, according to figures from the Office for National Statistics (ONS). This upward trend marked a recovery from a 0.8 percent decline in the previous three months. However, the increase was mainly fueled by a £5.3 billion surge in social benefits, which surpassed the growth in wages and salaries by £2.8 billion. The rise was partly attributed to the April annual adjustment of state pensions and working-age benefits. Additionally, revised ONS data revealed that Prime Minister Andy Burnham inherited an economy growing faster than initially reported. The statistics body upgraded second-quarter growth by 0.1 percentage point to 0.5 percent, implying that Burnham inherited an economy expanding at a quicker rate than originally recorded when he assumed office. Nonetheless, this progress was tempered by a downward adjustment for 2025's GDP, which the ONS reduced to 1.2 percent, a revision of 0.1 percentage point from the prior estimate. Liz McKeown, the ONS director of economic statistics, noted that 2025's overall growth was slightly lower than previously estimated, with the profile of growth across the quarters revised. However, stronger services growth in the latest quarter led to an economy that is now marginally larger than previously projected. Meanwhile, Labour faces a more challenging growth outlook for the coming year. Shortly before this report, Burnham and Chancellor John Healey faced a setback after the world's top economic forecaster, the Organisation for Economic Co-operation and Development (OECD), projected the UK economy would expand by only one percent next year, slightly lower than the previous forecast of 1.1 percent. The OECD subsequently revised its growth forecast for the current year to 1.1 percent from 0.9 percent. Inflation has remained below expectations this year, but the Bank of England's two percent target may take longer to achieve due to ongoing conflicts. The OECD had initially forecast inflation to reach 3.6 percent this year, but current projections anticipate inflation to average 3.1 percent this year, falling to 2.6 percent next year. Inflation across the G20 is expected to average 3.6 percent next year, higher than previously anticipated. These figures present a gloomy backdrop for Healey's first Budget, scheduled for October 28. Professor David Miles, one of three key members at the Office for Budget Responsibility (OBR), warned Healey that a tax burden surpassing 37 percent of GDP could result in additional costs on growth incentives. Miles suggested that it would be more expensive for the government to increase the tax burden from 40 to 45 percent of GDP than to raise it from 35 to 40 percent in the short term. Economists have revised their projections for Healey's fiscal headroom following recent changes to growth forecasts and increased borrowing costs. The buffer could shrink to around £5 billion, according to the Resolution Foundation, adding pressure on Healey to either raise taxes or reduce spending to replenish it.",
  "summary": "The average UK household’s disposable income increased in the second quarter of the year driven by a rise in benefit payouts. Real household disposable income per head – which measures the average spending and saving capacity of Brits – increased by one per cent in the second quarter to £6,577, new figures from the Office [...]",
  "key_points": [
    "UK households' disposable income rose 1% to £6,577 in Q2",
    "Social benefits surged £5.3 billion, outpacing wage growth",
    "OECD forecasts UK economy to expand 1% next year"
  ],
  "editors_take": "The surge in UK disposable income driven by soaring benefit payouts rather than wage growth presents a mixed picture for policymakers, highlighting short-term relief but also fiscal challenges ahead.",
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}