Britons are facing the biggest decline in living standards since records began in the 1950s, and the highest taxes since the 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.