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5 August 2022

UK households face worst fall in living standards for 60 years

Household incomes are set to fall by 3.6 per cent in 2022 and 4.3 per cent in 2023.

By Ben Walker

Uk households are set to experience the largest collapse in living standards since records began 60 years ago, the Bank of England has warned.

After raising interest rates from 1.25 per cent to 1.75 per cent, the Bank warned of a long and deep recession that will harm household incomes and living standards even more than the 2008 financial crisis. The forecast suggested there would be seven quarters of negative GDP growth (from the fourth quarter of 2022 through to the second of 2024) with output falling by 7.1 per cent.

Living standards, or real-terms post-tax household income, are forecast to fall 3.6 per cent in 2022 and 4.3 per cent in 2023 before a rise of 0.8 per cent in 2024.

[See also: UK 2022 recession: even Liz Truss can't save us]

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