Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Daily Mirror
Daily Mirror
Business
Emma Munbodh

Families to be £1,000 worse off as 'biggest income squeeze since 1970s' hits

The average household's income will fall by about £1,000 this year in response to inflation and the knock on effects of the war in Ukraine, a think tank has warned.

The Resolution Foundation said families are facing the biggest fall in incomes since the mid-1970s, as prices surge on top of a national insurance tax hike.

Many families are already expecting their monthly spend to go up when the energy price cap jumps in April, but the Foundation said the Ukraine conflict would push living costs even further as the prices of fuel and other goods surge.

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.

Its economist, Adam Cortlett, said soaring bills would hit low and middle-income families the hardest.

He also suggested poorer households would face a "living standards rollercoaster" because of the way that benefit payments are set months in advance.

For example, most working age benefits and the state pension are due to rise by 3.1% in April - a time when the increase in the cost of living could be as high as 8%. But high inflation in 2022 should lead to bigger payments next year.

The think tank called on Chancellor Rishi Sunak to announce fresh support for struggling families at his Spring Statement.

Torsten Bell, chief executive of the Resolution Foundation, said: "While the economic fallout from the war will feel trivial compared to the suffering experienced by millions of Ukrainians, it will still have a significant impact in Britain."

He suggested that surging gas and oil prices would worsen the "cost of living crisis", causing a "painful squeeze on family incomes".

A government spokesperson said: "We recognise the pressures people are facing with the cost of living, which is why we're providing support worth around £20bn this financial year and next to help."

This support package includes a council tax discount, freezing fuel duty and an energy bills rebate.

"We have also boosted the minimum wage by more than £1,000 a year for full-time workers and our £500m Household Support Fund is helping the most vulnerable with essential costs," they added.

Are the support measures in place enough? Let us know in the comments section below

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.