The UK faces its biggest drop in living standards on record as the surging cost of living eats into people’s wages.
The government’s forecaster said that household incomes – once rising prices were taken into account – would dive by 7% in the next few years.
It also expects the number of people who are unemployed to rise by more than 500,000.
It came as the chancellor said the UK was already in recession and set to shrink further next year.
But Jeremy Hunt said his Autumn Statement – which unveiled £55bn of tax rises and spending cuts – would lead to a “shallower downturn” with fewer jobs lost.
Energy and food bills have shot up due to the war in Ukraine and pandemic, and are squeezing household budgets.
Inflation – the rate at which prices rise – is at a 41-year high which the Office for Budget Responsibility (OBR) says is dragging on the economy.
The forecaster said price rises were likely to peak at 11% in the final three months of this year, thanks largely to the…