In the United Kingdom, inflation is projected to be persistent, real income will fall, and household budgets will be stretched, according to a top British think tank on Wednesday.

According to the National Institute of Economic and Social Research, an estimated 1.5 million households throughout the country may confront food and energy expenses that exceed their disposable income (NIESR).

According to the report, the Russia-Ukraine war is anticipated to drive up inflation and reduce economic production and real income.
According to the institution, the country’s GDP would rise by 3.5 percent in 2022, 0.8 percent in 2023, and 0.9 percent in 2024.

According to the NIESR, a confluence of shocks — Brexit, the COVID-19 epidemic, and the current surge in energy costs — is going to drastically cut people’s wages.

According to the NIESR, inflation will average 7.8 percent in 2022, after peaking at 8.3 percent in the fourth quarter. The Bank of England predicted a ten percent increase for the entire year.
According to the NIESR, real earnings would fall by 2.4 percent in 2022, while unemployment will climb to 5.1 percent in 2023.

The think group advised the government to give emergency assistance to offset the impact of the income shock.

It proposed a weekly increase in Universal Credit (a public subsidy for low-income people) of 25 British pounds (30.9 US dollars) between May and October 2022, as well as a one-time cash payment of 250 British pounds to each of the country’s 11.3 million lower-income households.

The NIESR predicted that the Bank of England will raise interest rates further this year, with the benchmark rate reaching 2% in the fourth quarter of 2022.

The think tank also stated that the central bank must tread carefully to avoid “on the one hand, allowing inflation expectations to deanchor and, on the other hand, throwing the economy into a protracted recession.”