As we welcome the New Year in, 2023 looks like being another horrendous year for living standards, the Resolution Foundation think tank recently warned.
The independent group said the new year should see some positive developments, including the end of double-digit inflation and fewer recruitment challenges for firms ahead of inflation-matching rises in benefits and the national living wage in April.
But living standards will get far worse before they get better, due to shrinking take-home pay, it stressed.
This chilling prediction coincided with a warning that millions of people nationwide are “financially fragile” and at risk of being over-stretched due to record levels of unsecured debt and increasing interest rates.
Research by accountancy giant PwC and credit app, TotallyMoney, found that the finances of 8.9 million adults were “teetering on the brink,” meaning that they may need to use their overdraft to cover spending on food and other everyday essentials.
They may also struggle to keep up with repayments on their borrowing in 2023, found the report, which estimates that unsecured debt such as personal loans now stands at more than £400 billion, equating to a record high of £16,200 for every household.
This, combined with rising interest rates following disgraced Tory former PM Liz Truss’s botched mini budget in September, is leaving household finances “worryingly vulnerable” according to the study.
November’s slight 0.4 per cent drop in CPI inflation will not take the pressure off families as the fall does not equal lower prices, just smaller price rises.
At the same time, average annual energy spending is set to rise by a record £900 to £2,450 per household in 2023, up from £1,550 earlier in 2022.
The Treasury claimed it was “committed to supporting families” through the cost-of-living crisis with a series of interventions, including increasing benefits in line with inflation, introducing changes to universal credit and providing support with energy bills.
With family living standards getting worse in 2023 before they get better and from a cost of living perspective, this new year looks like one of the bleakest years that I have welcomed in my lifetime.
Rodney Sadd
Adcocks Avenue
