U.K. Disposable Incomes Seen Dropping By the Most Since 2011
U.K. Disposable Incomes Seen Dropping By the Most Since 2011
(Bloomberg) -- U.K. disposable incomes are set for their biggest drop in a decade next year as rising inflation, tax hikes and tighter monetary and fiscal policy put the squeeze on consumers, according to Credit Suisse.
The bank predicts a 1.5% drop in real disposable incomes in 2022, the biggest fall since the aftermath of the financial crisis in 2011. That will in turn damage the prospects for economic growth, analysts including Sonali Punhani wrote in a note.
The forecast is the latest sign of concerns around a looming crunch in the U.K. this winter, with households facing a series of higher costs at the same time that the government withdraws its pandemic-related support programs.
While savings built up during the pandemic should help many households to weather the crisis, the squeeze on incomes may prevent those savings from fueling an expected boom in spending, Credit Suisse said.
Instead people will need to dip into savings to pay the bills, hurting consumption and potentially knocking 1 point off growth next year, the bank said.
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