UK still faces record hit to living standards, OBR predicts
By David Milliken
LONDON (Reuters) - Britain remains on track for a record fall in living standards over the two years to the end of March 2024, despite an upward revision to growth forecasts, the Office for Budget Responsibility (OBR) said on Wednesday.
The OBR said real household disposable income per person was on course to fall by a cumulative 5.7% over 2022/23 and 2023/24, 1.4 percentage points less than it forecast in November but still the biggest two-year drop since records began in 1956/57.
The fall mainly reflected the higher cost of energy and other goods imports, and living standards were still expected to be 0.4% below pre-pandemic levels in 2027/28, the OBR added in forecasts alongside finance minister Jeremy Hunt's annual budget.
"Developments since our November forecast have been largely positive, but the economy still faces significant structural challenges," the OBR said.
Britain's tax burden, measured as a share of economic output, was on course to rise to its highest since World War Two at 37.7% by 2027/28, while public spending would settle at 43.4%, its highest since the 1970s.
The OBR also said it stuck with its assessment that the costs of Brexit - through reduced trade and investment as well as immigration barriers - would lower Britain's productivity by 4% over the long term compared with staying in the EU.
(Reporting by David Milliken; editing by William James and Kate Holton)