New warning on living standards follows Chancellor’s Spring Statement

By Lisa James
Home » New warning on living standards follows Chancellor’s Spring Statement

Living standards could be heading for the largest drop on record and may not recover for at least two years, according to a new warning issued the day after the Chancellor’s Spring Statement.

The Office for Budget Responsibility has warned rapidly rising energy prices would push inflation towards 9%, its highest level in 40 years, which will put pressure on household consumption.

Coupled with rising taxes, this fall in spending power will lead to a decline of 2.2% in living standards this year and next – the largest fall on record.

As a result, living standards will not recover to their pre-pandemic level until 2024-25, the OBR added.

The warning comes the day after the Chancellor issued his Spring Statement in which he raised the threshold for National Insurance payments from July, cut fuel duty with immediate effect and said the basic rate of Income Tax would be cut by 1p, to 19p from next year.

There was also the promise of temporary business rates relief for retail, hospitality and leisure businesses and subsidies for management and apprenticeship training.

UKinbound CEO Joss Croft said the Spring Statement brought ‘some small positives for inbound tourism’.

“The fuel price reduction and national insurance allowance increase will help the bottom lines of some – but not all – of our members, and both the management and apprenticeship training subsidies will help address some of the skills shortages facing the sector.

“We welcome the new temporary 50% business rates relief for eligible retail, hospitality and leisure businesses, but it is imperative that the eligibility criteria includes all tourism businesses in the whole supply chain if the sector is to provide a world-class welcome and experience for international visitors during this Jubilee year.”

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