The Institute for Fiscal Studies (IFS) has predicted that millions of people will be worse off in 2022 as a result of spiralling costs and tax rises.
Responding to the Autumn Budget, the IFS predicted that low-income families will be squeezed by a rise in the cost of living. The Office for Budget Responsibility (OBR) recently warned that the costs of living are set to rise at their fastest rate in 30 years.
The IFS stated changes to income tax and National Insurance, alongside rising household bills, will mean slower growth in living standards.
The Director of the IFS said:
`With, in the words of the OBRinflation quite possibly hitting its `highest rate in the UK for three decades, millions will be worse off in the short term. Next April benefits will rise by over 3&, but inflation could easily be at 5%. That will be a real if temporary, hot of hundreds of pounds a year for many benefit recipients.
`We are not at 1970s levels of inflation, but we are now experiencing enough inflation that real pain will be felt as low-income households – most of when have next to nothing in the way of financial assets – wait more than a year for their incomes to catch up. For some in work that may never happen.`