A new report from the National Institute for Economic and Social Research (NIESR) warns that British households could suffer a hit of up to £4,000 this year. According to the report, even though the nation could narrowly miss a recession, it won’t feel like that to millions of people.
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The report comes after the news that the government is planning to scale back support for energy bills this spring. As a result, low and middle-income households are now facing an even bigger financial hit in the middle of a cost of living crisis.
In NIESR’s quarterly economic health check, they found that even though Britain was likely going to avoid a full-blown protracted recession, growth is predicted to remain nearly zero thanks to the combination of high inflation and rising borrowing costs. So, even though the country won’t technically be in a recession, nearly 7 million people will feel like they’re in the midst of one, anyway.
Additionally, the International Monetary Fund recently warned that Britain would be the only industrialised country with a shrinking economy due to high inflation, rising taxes, and higher interest rates from the Bank of England.
What does this mean for you?
All these factors are coming together to create an enormous strain on an already vulnerable population. About a quarter of the nation’s population will struggle to pay their energy bills and put food on the table with their current incomes.
The high inflation rate at the moment is already depleting consumer spending power, but without serious assistance from the government, many middle-income households could lose up to 13% of their income, or about £4,000 in the next financial year.
NIESR has urged the government to rethink their current plans for economic growth and stance on energy bill assistance, supporting raising public sector investment and price caps instead to help reboot economic growth.
If you’re concerned about what this could mean for your finances, get in contact with the experts at Dental & Medical Financial Services today.