Household income set to collapse most since 1970s

Household income in the country is set to collapse by the most since the mid-1970s after Russia’s invasion of Ukraine sent energy prices soaring to new highs, stated reports today (8) citing a think tank’s claim.

According to the Resolution Foundation, dramatic increase in global oil and gas prices will push UK inflation above 8 percent this spring, causing average incomes across Britain to fall by 4 percent in the coming financial year – a hit worth £1,000 per household. This will be the biggest annual decline since 1975, a scale of decline normally associated with recessions.

“The UK’s post-Covid economic recovery is well under way, but a deep living standards downturn is just getting going,” states the report.

The Resolution Foundation’s principal economist Adam Corlett said, “Britain has stepped out of a global pandemic, and straight into a cost of living crisis.” 

The think tank is calling on the Chancellor Rishi Sunak to address the issue in his upcoming spring statement and increase benefits by 8.1 per cent this year, The Guardian reported.

Meanwhile, retail industry bosses have warned that the squeeze on living standards would hit consumer spending this year.

The British Retail Consortium (BRC) said today that while total sales rose in February by 6.7 percent compared with the same month a year earlier, and by 4.9 percent  compared with the same month in 2020 before the pandemic struck, still “future is looking uncertain”.

“The future is looking increasingly uncertain, with current demand unlikely to be sustained,” Helen Dickinson, the chief executive of the consortium said. 

“The cost of living will continue to spiral due to global inflation, increasing energy bills and the rise in national insurance this spring. With households facing lower disposable income, discretionary spend will be one of the first things to feel the squeeze.”

A Government spokesperson said: “We recognise the pressures people are facing with the cost of living, which is why we’re providing support worth around £20 billion this financial year and next to help.”