Economy

High inflation to impact millions in UK, research institute says

High inflation, rising taxes, poor growth to result in living standards falling for many people over next year, Institute for Fiscal Studies head says

Ovunc Kutlu   | 28.10.2021
High inflation to impact millions in UK, research institute says

ANKARA

High inflation is expected to affect millions of people in the UK, according to the London-based Institute for Fiscal Studies (IFS).

The UK's Office for Budget Responsibility said on Wednesday that inflation may peak at close to 5% next year, potentially the highest rate seen in the country for three decades.

If this is realized, "millions will be worse off in the short term," IFS Director Paul Johnson said in a statement on Thursday.

"We are not at 1970s levels of inflation, but we are now experiencing enough inflation that real pain will be felt as low-income households – most of whom have next to nothing in the way of financial assets – wait more than a year for their incomes to catch up. For some in work that may never happen," he added.

The head of the economic research institute said high inflation, rising taxes and poor growth, which are undermined more by Brexit than by the coronavirus pandemic, will result in living standards barely rising and falling for many people over the next year.

Johnson also made remarks about Britain’s Chancellor of the Exchequer Rishi Sunak who delivered his third budget Wednesday, billed as his first post-COVID-19 budget.

"In the end Mr. Sunak has bowed to the demands created by public services which have suffered a decade of cuts, and to the inevitability of increased spending on the NHS," Johnson said.

"Finding the key either to reforming public services to make them cheaper and more efficient, or to getting higher economic growth, are challenges which have defeated most of his predecessors," he argued.

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