Thursday, 1 December, 2022

UK faces biggest fall in living standards on record

The UK faces its biggest drop in living standards on record as the cost-of-living crisis eats into people's wages.

The government's forecaster said that disposable household incomes - when adjusted for rising prices - would dive by 7% in the next few years.

Living standards will not recover to the levels they were last year until 2027-28, it added.

It came as the chancellor said the UK was already in recession and set to shrink further next year.

However, Jeremy Hunt said his Autumn Statement - which unveiled £55bn of tax rises and spending cuts - would lead to a "shallower downturn" with fewer jobs lost.

Energy and food bills have shot up due to the war in Ukraine and pandemic and are squeezing household budgets.

Inflation - the rate at which prices rise - is at a 41-year high and the Office for Budget Responsibility (OBR) warns it is dragging on the economy.

A recession is defined as when a country's economy shrinks for two three-month periods - or quarters - in a row.