Would You like a feature Interview?
All Interviews are 100% FREE of Charge
Real living standards may not improve until the “late 2020s” as the economy struggles to recover from the current cost of living crisis, warns the head of the Office of Budget Responsibility (OBR). increase.
The chairman of the commission, Richard Hughes, said the country was facing “the biggest decline in living standards on record” and that it could take up to five years for people to start living better. said.
He told the BBC Sunday with Laura Kuensberg:
“But even in the late 2020s, or five years later, people’s real purchasing power will not return to pre-pandemic levels.”
He said the UK economy has been “held down” by a variety of factors, including the loss of about half a million people from the workforce, the “stagnation of investment” since 2016, and declining productivity since the 2008 financial crisis. It is being done,” he said.
The country is also a net importer of both food and energy, which exacerbates the challenges faced by the global economy, he added. We produce.”
“It simply means that as a country we are poorer and worse off because our wages cannot keep up with the prices of things like energy and food.”
Hughes also commented on the challenges of predicting economic changes after inflation peaked at 11.1%, after saying the OBR would initially hit 8.7%.
“All forecasts eventually prove wrong. has errors,” he said.
“Especially in the UK, where energy prices have increased fivefold in the last year or so and then declined by half, we are forecasting in an incredibly volatile environment, as it is in all countries today. think.”
He said there was “a great deal of uncertainty about the outlook for inflation” largely due to high food and energy prices.
However, he added, “There are many factors that should bring these prices down for the rest of the year.”
According to OBR’s latest report following the budget, household disposable income (the amount of money available after deducting basic living expenses) will decline by 5.7% over the two-year period from 2022 to 2024.
“It will be the biggest drop in two years since records began in 1956-57,” said OBR, although conditions have improved from forecasts in the fall when living standards were expected to fall by 7.1%. Stated.
Each year, inflation, as measured by the Consumer Price Index (CPI), will fall from 9.1% in 2022 to 6.1% this year and to 0.9% in 2024, well below its next target of 2%. is less than According to OBR forecasts, 3 years.
Seven years after the Brexit vote, the report said nothing had changed the forecast that Brexit would hit Britain’s productivity by 4% in the long run.