FAMILIES are today braced for a “Groundhog Year” of high taxes, energy bills and mortgages as the cost of living crisis continues to rage in 2023.
Real-term incomes will slump an average £880 per household – making next year’s squeeze even worse than the past 12 months, economists warn.
1
Gloomy projections by the Resolution Foundation think tank shows the country will be “swamped” by a blizzard of woes.
Their analysis shows Brits will be clobbered by a £900 energy bill hike as the Government’s support is scaled back.
Jeremy Hunt’s Autumn Statement will also pile an extra £700 in taxes onto the average household, they calculate.
Meanwhile two million families will be forced onto more expensive mortgages costing the average fixed-rate household an extra £3,000 a year.
And they warn the pain will be made worse by a drop in real wages well into 2024.
The various headwinds means typical household income will drop 3.8 per cent, bigger than the 3.3 per cent last year that saw incomes plummet by £800.
A YouGov survey of more than 10,000 adults found people are more than four times as likely to say their financial situation has got worse rather than better in 2022.
Meanwhile firms are finally managing to plug record vacancies that caused a staffing crisis.
Most read in Money
Fresh support from the Government – including a £900 sum for eight million of the poorest families and a 10 per cent benefits rise – is set to cushion the blow.
The Resolution Foundation also reckons inflation will now come down after peaking at a busting 11.1 per cent in October, while wholesale energy prices are also falling.
But despite the glimmers of hope, the think tank warns the pain for families will not offset the “living standards headwinds” next year.
Chief Executive Torsten Bell said: “From a cost-of-living perspective, 2022 was a truly horrendous year – far worse than any year in the pandemic or financial crisis.
2023 should see the back of double-digit inflation, but it looks set to be a groundhog year for many families whose incomes look set to fall by just as much as they did in 2022.”
“For families’ living standards, things will get far worse in 2023 before they start to get better.”
A Treasury spokesman said: “Putin’s illegal war in Ukraine and the aftershocks of the pandemic are pushing up prices around the globe, and we know that is difficult for people here in the UK.
“That’s why tackling inflation is this government’s number one priority, with a plan to more than halve inflation next year.”
