British wages next year will fall back to 2006 levels, while 2023 will also bring a slide in house prices and an increase in divorces, according to a forecast that finds the UK is on course to be a less happy place to live.

The consultancy firm PwC said a look ahead to 2023 showed there were few positive indicators, with most measures of the UK’s economic and social performance going into reverse.

Wages adjusted for inflation will fall below those in France, ending a brief period during the pandemic when earnings were higher. PwC said average real wages in the UK would fall from a peak in 2020 of £36,330 to £34,643 next year. Meanwhile, in France, where inflation has been much lower, real wages will only slip back from £35,848 in 2021 to £35,462 in 2023.

Higher taxes are also expected to play a part in making 2023 more difficult for many, with the UK government freezing income tax thresholds again from next April while cutting energy subsidies.

An 8% slump in house prices will add to the gloom. Those who treasure the high value of their homes will be upset and those who might benefit will be unable to take advantage because of higher interest rates. The number of housing market transactions will drop below 1m for the first time in more than a decade, according to the forecast.

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One result will be a 20% rise in divorces to almost 140,000 in England and Wales, according to PwC, equivalent to 16 divorces every hour, although the introduction of no-fault divorces in April 2022 will be an important factor spurring the increase.

As the cost of living crisis combines with rising unemployment, an increase in bankruptcies and struggling public services, the main measure of life satisfaction is expected to slump to its lowest level since records began in 2013. The happiness index will drop from a peak of 7.7 in 2019 to 7.3 in 2023, the report said.

Barret Kupelian, senior economist at PwC, said the UK economy faced “a highly challenging” year, and “it is not surprising that these chilly headwinds will continue throughout 2023, bringing with it some unwelcome milestones in terms of economic and social wellbeing measures”.

He said there was light at the end of 2023, with a predicted fall in inflation, a more stable outlook for the global economy and a rise in immigration that would increase the number of skilled workers and add £19bn to economic output.

Victory by the England women’s football team in next year’s World Cup, which is a good bet after recent performances and success at the Euros, would also lift the mood, the report said.