There has been much talk over the last few weeks and months about the UK falling into recession this year, but it seems that this may in fact be narrowly avoided – a fact that is certainly something to celebrate.
However, despite this brief glimmer of hope and light at the tunnel, new research from the National Institute of Economic and Social Research (1) has found that household incomes will still feel the squeeze as the cost of living crisis continues to make its presence known.
Inflation is still a concerning factor for this year and the organisation anticipates that it will remain above three per cent by the end of 2024, only hitting the Bank of England’s two per cent target until the latter half of 2025.
“The UK will likely avoid a protracted recession in 2023, but GDP growth is set to remain close to zero. However, with the cost-of-living crisis having a lasting effect on households, for at least seven million it will certainly feel like a recession,” it was observed.
Projections indicate that one in four households will not be able to meet in full their planned food and energy bills from post-tax income in 2023/2024, an increase on around one in five last year.
Middle-income households, for example, are expected to see their personal disposable income fall by between seven to 13 per cent, reaching up to £4,000 in the 2022/2023 financial year.
It’s also expected that people aged between 50 and 64 years old will return to work over the next few years or so, as saving pots are depleted and fewer workers decide to take early retirement.
The cost of living crisis is affecting us all, making essentials like energy, food, rent and fuel a lot more expensive. This has led to many cutting back on how much they spend on food or even eating less, so they can pay for heating over the winter months.
In addition, others are also falling into debt or using credit cards to pay for essential items, which is making the problem worse.
If you are facing debt issues at the moment, it’s important not to hide your head in the sand, as you’ll only make the situation worse – and a lot more difficult to ultimately resolve.
Priority bills should always be sorted out first before considering paying down other debts and it can be useful to come up with a budget to help you live within your means over the coming months.
If you are struggling with debt at the moment because of cost of living challenges, get in touch with us today for debt advice and more.
References:
1. https://www.niesr.ac.uk/publications/recession-avoided-prospects-remain-bleak?type=uk-economic-outlook
