LONDON - Britons are set for the biggest squeeze on living standards in a century unless the next prime minister delivers tens of billions pounds of additional support, according to new analysis.

In a stark assessment of the task facing the winner of the race to succeed Boris Johnson, the Resolution Foundation warned of a 10 per cent fall in real disposable incomes over two years as soaring energy bills drive inflation well into double digits.

That would leave a typical household £3,000 (S$4,900) worse off and plunge 3 million more people into poverty.

The estimates pile further pressure on whoever is named Conservative Party leader on Sept 5 - Foreign Secretary Liz Truss or former Chancellor Rishi Sunak.

Truss, the front runner, has advocated more than £30 billion of tax cuts but has refused to detail what extra help is planned.

"No responsible government could accept such an outlook, so radical policy action is required to address it," said Lalitha Try, a researcher at the Resolution Foundation. "We are going to need an energy support package worth tens of billions of pounds."

With inflation set to exceed the 13 per cent peak forecast by the Bank of England, workers will be no better off by mid-2023 than they were 20 years earlier, the research group said. The poorest households will feel the squeeze most acutely.

The foundation urged the next government to raise welfare benefits in line with inflation in October - when energy bills are set to soar by 80 per cent - rather than in September as is customary.

"Britain is already experiencing the biggest fall in real pay since 1977, and a tough winter looms as energy bills hit £500 a month," Try said. "With high inflation likely to stay with us for much of next year, the outlook for living standards is frankly terrifying." BLOOMBERG