UK facing biggest drop in living standards

The UK facing biggest drop in living standards

The UK is facing its biggest drop in living standards on record.

According to reports, wages fail to keep pace with rising prices.

Energy prices could push inflation to a 40-year high of 8.7% in the final three months of 2022, the government forecaster said.

Rising prices and tax hikes mean living standards will not recover to their pre-pandemic level until 2024-25.

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

Living standards are expected to drop by 2.2% this year.

Rishi Sunak said a 5p a litre fuel duty cut would take effect at 18:00.

Petrol prices had already risen by 20% since the OBR’s previous forecast.

Household energy bills are set to increase by 54% in April.

The OBR said that energy bills would rise by another 40% in October, pushing inflation to a 40-year high of 8.7% in the final three months of the year.

The chancellor added VAT on energy-saving materials that would be scrapped which included insulation, solar panels, and heat pumps.

The Chancellor then announced that the government’s household support fund will be doubled from April to £1bn, the money will be allocated to councils to support vulnerable households.

Mr. Sunak reiterated his “ambitions” to reduce taxes, stating he would be publishing a tax plan later today with a “principled approach” to cutting taxes over parliament.