The drop in real household disposable income would represent "the largest two-year fall in living standards since records began in the 1950s," Richard Hughes, chairman of the Office for Budget Responsibility (OBR) said.
"We think households are going to dip into some of their savings to help manage the squeeze on living standards and that supports growth in the near term," he added.
Meantime, Jeremy Hunt handed a huge pensions giveaway to the wealthiest 1%. Someone with a £2m pension pot will get a tax cut of £275,000 when they take their tax-free lump sum as a result of the change.
Torsten Bell, chief executive of the Resolution Foundation think tank, said it means “rich people now have no overall limit on how much can be put into their pension pots tax-free”, and can pass this on to their heirs with “absolutely zero inheritance tax”.
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