High earner, not rich yet (HENRY) households are set to experience an average real reduction in annual purchasing power of more than £15,000 by 2029, according to analysis from IG.

The investment and trading platform analysed data from the Treasury assessing how changes announced in the November Budget would affect adults across household income deciles up to 2028/29.

Those within the ninth decile (£65,700 average income) did not receive any net support from the changes, while those in the top decile (£103,700 average income) had an average net annual income impact of -0.3 per cent, according to the research.

Factoring in household inflation and fiscal drag driven by frozen tax thresholds over the next three years, those in the ninth decline would face an average reduction in real purchasing power of £8,935 by 2029.

IG’s analysis showed that earners that fall into the top decile will have an average reduction in real purchasing power of £15,658.

IG chief market analyst, Chris Beauchamp, said that while the Chancellor met her fiscal rules and avoided increases to income tax or national insurance, the combination of policy measures and frozen thresholds would have a “disproportionately large” impact on HENRY households.

“As the name suggests, many in these income bands carry high living costs and wouldn’t recognise themselves as ‘rich’,” Beauchamp continued.

“Once inflation and fiscal drag are factored in, the squeeze on real disposable income will feel significant, forcing some households to reassess spending, saving and long-term financial plans.

“In this environment, households in this bracket should be motivated to become more engaged with investing as they recognise that growing and protecting whatever wealth they can is increasingly crucial.

“However, there is also the risk that squeezed disposable incomes limit how much households can invest - something the government should consider as part of its drive to get more Brits investing.”

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