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Warning UK faces biggest income squeeze in nearly 50 years - Perthshire Chamber of Commerce

Warning UK faces biggest income squeeze in nearly 50 years

War in Ukraine will push up energy prices and see UK families squeezed even further, a think tank has warned.

The Resolution Foundation forecasts that a typical household's income will fall by about £1,000 this year once the effect of inflation is accounted for.

That would be the biggest real-terms fall in incomes since the mid-1970s, it added.

A UK government spokesperson said it recognised the pressures households are facing.

Many families were already expecting their monthly spend to go up when the energy price cap jumps in April, and National Insurance contributions rise.

But in a new report, the Resolution Foundation said the Ukraine conflict would push up living costs even further as the prices of fuel and other goods surged.

It expects inflation, which measures how the cost of living changes over time, to peak in April at 8.3%. That is much higher the Bank of England's forecast of 7.25% back in February.

"The crisis in Ukraine has increased both the scale of price rises but also the degree of uncertainty about their levels and duration," the Foundation's report said.

"The UK's post-Covid economic recovery is well under way, but a deep living standards downturn is just getting going," it added, also warning that wages are not forecast to grow particularly fast either.

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