British budget watchdog see dips in living standards for two years
Londfon, England, United Kingdom (AHN) – Britain’s Office for Budget Responsibility warned Thursday that Britons’ standard of living is expected to fall in the next two years as inflation eclipses expected salary hikes.
Among the scenarios foreseen by the OBR is the consumer price index hitting 6 percent, which would cause many households to further tighten their belts amid austerity measures put in place by the coalition government. However, the OBR predicted wages will rise by a mere 2 percent average this year.
A prediction of a new age of austerity was made by Oxford Economics as early as two years ago as a result of the recession that downgraded living standards in Britain to below the 2005 level.
According to Oxford Economics, gross domestic product per capita in 2009 dipped to $34,050 (GBP 22,700) from $34,500 (GBP 23,000) in 2005, which already took into account the 1.3 percent inflation rate then.
Another British think tank, the Institute for Fiscal Studies, said the government needs to identify another $6 billion (GBP 4 billion) in savings due to the rising inflation rate.
British Chancellor George Osborne had admitted it would be a difficult year for Britons, although he was optimistic unemployment would go down as more jobs are created and some growth would be registered each year. To help Britons cope with the rising cost of living, Osborne announced on Wednesday a one-pence reduction in fuel duty.
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