The Observer view on the autumn budget: Labour must break this cycle of sluggish growth

There are tough decisions to be made, but living standards must improve if the economy is to be rescued

Things will get worse before they get better." That was the gloomy prognosis from Keir Starmer in his first set-piece speech as prime minister in the Downing Street garden last Tuesday. This was intended as a warning to voters that they can expect tough decisions in the budget this autumn.

But he could also have been talking about the annual living standards outlook published by the Resolution Foundation on Thursday, which forecasts that the poorest tenth of working-age households will be 600 a year worse off on average in 2029 than they were in 2023, and that they will have seen no real income growth in more than a quarter of a century. For median working-age households, incomes are predicted to grow by just 0.8% a year on average over the parliament, far lower than the 2.1% a year experienced between 1997 and 2009. This is a grim outlook, particularly for less affluent families who are the most squeezed. It means Labour ministers are entirely justified in pointing out just how challenging is the economic situation that they inherited from the Conservatives: poor forecast growth, together with the unfunded spending commitments that chancellor Rachel Reeves has written about in the Observer today, mean she has very difficult choices to make.