The Institute for Fiscal Studies (IFS) has predicted that millions of people will be worse off in 2022 as a result of spiralling costs and tax rises.
Responding to the Autumn Budget, the IFS predicted that low-income families will ‘feel real pain’ due to a rise in the cost of living. The Office for Budget Responsibility (OBR) recently warned that the cost of living is set to rise at its fastest rate in 30 years.
The IFS stated changes to income tax and national insurance, alongside rising household bills, will mean slow growth in living standards.
An analysis carried out by the business group found that over the next year, those earning around £25,000 will find that their pre-tax pay just outpaces price rises. However, once extra income taxes are due, their take-home pay will fall by around 1%.
The government is ‘taking targeted action worth more than £4.2 billion per year to help families with the cost of living’, a spokesperson for the Treasury said.