UK living standards see worst decline on record
Britons are facing the biggest decline in living standards since records began in the 1950s, and the highest taxes since World War II, as the economy grinds to a halt this year, the Office of Budget Responsibility (OBR) reported on Wednesday.
According to the report, real household disposable income, a measure of real living standards, will drop by 5.7% over the financial years 2022-23 and 2023-24.
“While this is 1.4 percentage points less than forecast in November, it would still be the largest two-year fall since records began in 1956-57,” the report said.
A surge in energy and consumer goods prices triggered inflation, which currently stands above nominal wages and has led to a historic fall in disposable incomes, the OBR noted, adding that “this means that real living standards are still 0.4% lower than their pre-pandemic levels.”
According to the forecast, living standards will not return to pre-pandemic levels until 2028 and the tax burden remains on course to be the highest since the Second World War.
The UK “continues to see the tax burden reach a post-war high of 37.7% of GDP at the forecast horizon in 2027-28, including the highest ratio of corporation tax receipts to GDP since the tax was introduced in 1965,” the watchdog said.
The British economy is expected to shrink by 0.2% this year despite claims by the government that the country is set to avoid a recession.
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