UK faces huge drop in living standards

The UK faces huge drop in living standards.

Official forecasts show the drop is the largest fall in a financial year since records began in 1956.

The huge drop in living standards – disposable household incomes when adjusted for inflation – equates to a dive of 2.2% this year, the Office for Budget Responsibility (OBR) said on Wednesday, March 23.

The bleak forecast comes as Chancellor Rishi Sunak raised the threshold at which workers start paying National Insurance from £9,600 to £12,570 in his Spring statement.

Sunak also implemented a 5p reduction in fuel duty on March 23.

But drivers reacted with fury as motoring groups slammed the cut as a “drop in the ocean”.

Rising prices and increased taxes mean living standards will not recover to their pre-pandemic level until 2024-25, the Office for Budget Responsibility said.

The chancellor said government would “stand by” people hit by higher prices.

However, the OBR, the government’s fiscal watchdog, said that the chancellor’s tax cuts would offset only approximately a quarter of the tax rises announced in last year´s budget.

The OBR added that Russia’s invasion of Ukraine had “major repercussions for the global economy, whose recovery from the worst of the pandemic was already being buffeted by Omicron, supply bottlenecks, and rising inflation”.

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