The UK is in recession and is facing its biggest drop in living standards in 66 years

The UK is in recession and is facing its biggest drop in living standards in 66 years
The UK is in recession and is facing its biggest drop in living standards in 66 years

The UK is in recession and is facing its biggest drop in living standards in 66 years

  • Daniel Thomas
  • Financial and Economic Correspondent – ​​BBC

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Food prices have skyrocketed

The UK is facing the biggest drop in living standards on record, with the cost of living crisis weighing on wages.

And the government’s Expected Income Report showed that families’ disposable income will fall by 7 percent in real terms in the coming years.

According to the Bulletin, living standards will not recover to last year’s levels before 2027-2028.

This comes at a time when the finance minister said the country was witnessing a recession and the economy would continue to contract next year.

Jeremy Hunt added that his financial bulletin, which revealed a $55 billion increase in tax revenues and a reduction in spending, will mitigate the effects of the economic crisis and reduce the number of job losses.

Energy and food prices have skyrocketed due to the war in Ukraine and the corona pandemic, putting a strain on family budgets.

Inflation has reached levels of 41 years ago.

Economic forecasts indicate that prices will increase by 11 percent in the last three months of the year thanks to government energy price guarantees.

She expects the price hike to devalue wages and reduce living standards to their highest levels since 1956, and that inflation-adjusted family incomes will recover, but remain below pre-pandemic levels, and that point will come in to be reached in 2028.

She adds that rising prices, rising interest rates and falling house prices will affect consumption and investment, leading to a recession in the economy that will last a little over a year.

A recession is defined as the economy contracting for three consecutive months, resulting in falling corporate earnings and wages and rising unemployment. This means that the government’s tax revenues, which it will spend on public services, will decrease.

Presenting the autumn report to Parliament, Jeremy Hunt said families, retirees, businesses, teachers, nurses and others are concerned about the future.

He added that he will take tough decisions to fight inflation and reduce public debt.

Hunt hopes its fall financial statements, which will see a $55 billion increase in tax revenue

Quasi Quarting, Hunt’s predecessor, had promised deep tax cuts without explaining how he would finance them, which spooked investors, sent sterling to record lows and sent government bonds higher.

Part of the reason for the problem was Quarting’s refusal to release an independent assessment of his plans, which is usual.

Hunt, who scrapped most of his predecessor’s plans, said the cost of government borrowing had fallen recently and the pound had appreciated.

He added that the low interest rates brought about by the new government’s policies are beginning to bear fruit in the economy and public finances.


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