UK households will suffer a record drop in disposable income in coming years, according to estimates from the Office for Budget Responsibility (OBR), which warns that the crisis will erase the last eight years of growth in household wealth, which in 2028 will still be below pre-pandemic levels. .
The Office, which expects UK GDP to contract by 1.4% next year while inflation has reached 41-year records, predicts that the real disposable income of UK citizens will fall by 4.3% next year. fiscal year 2022-23, which would be the largest decline since records began in fiscal year 1956-57.
This record contraction in household disposable income in the current year will be followed by the second largest decline in the entire historical series in 2023-24, with a decrease of 2.8%.
“This will be only the third time since 1956-1957 that data per person has been declining for two consecutive fiscal years,” says the Balance Sheet Office, which states that the last time this happened was after the global financial crisis.
In this way, the estimated cumulative decline of 7.1% between fiscal years 2021-22 to 2023-24 is large enough to return per capita disposable income “to its lowest level since 2013-2014”.
In this sense, the office calculates that the spendable wealth of the British for the fiscal year 2027-28 will regain the level of the year 2021-22, noting that in such a situation it will remain less than 1% of the levels prior to the COVID epidemic. -19.
Despite the estimated loss in standard of living, the Office for Budget Responsibility notes that the contraction in per capita disposable income could have been greater without the announced fiscal support measures, in particular reductions in energy prices and other support measures to deal with the increase in the cost of living, which raises the standard of living. Per capita disposable income will increase by 4.5% in 2022-23 and by 2.5% in 2023-24, compared to what would otherwise have happened.
On Thursday, British Finance Minister Jeremy Hunt announced a tax consolidation plan worth 55 thousand pounds (62,955 million euros), with tax increases estimated in the range of 25 thousand million pounds (28,616 million euros) and an adjustment in spending of about 30 thousand. One million pounds (34,339 million euros).
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