British Workers Set for More Years of Living Standards Misery

(Bloomberg) --

U.K. workers are facing three years of barely rising living standards as surging inflation bites. 

When adjusted for prices, Office for Budget Responsibility projections published this week suggest average earnings will be little higher at the end of 2024 than they are currently. 

The forecast makes dismal reading for millions of Britons, who effectively went more than a decade without a pay rise following the financial crisis. And the pressure on the average household is set to intensify after Chancellor of the Exchequer Rishi Sunak announced huge tax increases this year to boost the National Health Service and bring down borrowing.

 
According the OBR, an independent fiscal watchdog, real after-tax incomes will fall by around 1.5% in the second half of this year and take until 2023 to return to their mid-2021 levels.

The strain on households is fueling concern that the Bank of England risks doing further harm if it hikes interest rates next week, as expected. Markets expect BOE officials to lift the benchmark rate, currently close to zero, to 1% by the middle of next year in response price pressures that are forecast to lift inflation to more than double their 2% target.

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