Budget 2023: Living Standards To Suffer Biggest Fall Since Records Began
People will be hit with the biggest fall in living standards since records began following Jeremy Hunt’s Budget, which handed a huge tax cut to the rich.
The independent Office for Budget Responsibility (OBR) said on Wednesday household disposable income would fall by 5.7% over the two financial years 2022-23 and 2023-24.
While this is 1.4% less than forecast in November, the watchdog said it would still be the largest two-year fall since records began in 1956-57.
According to the analysis, living standards would also still be below pre-pandemic levels in 2027-28.
Speaking in the Commons, Hunt said the OBR forecast the UK would now narrowly avoid a recession.
The chancellor also said inflation was predicted to fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.
Hunt’s biggest announcement was an expansion of free childcare, with parents to be given an extra 30 hours a week for every single child over the age of 9 months, starting the moment maternity or paternity leave ends.
The measure will be introduced in stages. From September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week.
But the chancellor is already facing a backlash for a shake-up of pension rules which will largely help the wealthiest.
He used the Budget to scrap the lifetime allowance, which limited to £1.07 million the amount of money that could be put into a pension pot before it was taxed.
Hunt also unveiled an increase in the pensions annual tax-free allowance, from £40,000 to £60,000.
Labour leader Keir Starmer told the Commons: “We needed a fix for doctors, but the announcement today is a huge giveaway to some of the very wealthiest.
“The only permanent tax cut in the Budget is for the richest 1%. How can that possibly be a priority for this Government?”