With 2022 fast approaching, a lot of predictions are being made as to what the country will face.
These predictions are not looking good for the average UK citizen.
The cost of living in the UK has rapidly increased this year, reaching the highest number the UK has seen in the past 10 years, the Office for National Statistics (ONS) has shown. In the past 12 months up until November, the cost of living has soared by a whopping 5.1%! With experts having predicted that the peak of inflation will be at 6% by the spring.
These predictions, by the Resolution Foundation and by the Bank of England, also warn of the stress that will be placed on the country by the real wage growth. This growth was stagnant in October and began falling ever since. They also suggest that there will likely not be growth again until the final quarter of 2022!
With the rise in energy bills, unmoving wages, and ever rising taxes, it is possible that UK households could be facing a £1,200 hit to their yearly incomes according to The Resolution Foundation.
This foundation has stated that as a result of this, millions of families will be confronted with a ‘cost of living catastrophe’ in 2022, with others now referring to the upcoming year as the ‘year of the squeeze’.
The government claims to be putting £4.2bn in place to support families through these hard times but this may not prove to be enough with such a huge hit to their yearly payouts.
The reported numbers is a result of the 1.25% rise in National Insurance contributions as the typical household would be having to pay a total of £600 on this, as well as the higher energy prices being predicted to add another £500 to household spending.
Both of these will be being enforced in April 2022.
This even impacts those firms who are in the energy sector, they can see a rise in £100 added to their gas and electric bills. With customers in collapsed energy companies being shifted from one supplier to the next, it would mean they will be paying a different and very likely a more expensive bill than they would previously have been paying.
Experts have predicted that with wholesale gas price levels, having risen to a new record high of 450p per therm, could amount annually to an average of £2,000 in 2022.
As a result of this news the Labour party has stated that they think the UK government should remove the cost of VAT from household energy bills straight away to help with household spending over the winter months. Though this is not yet a measure that has been put in place, we can hope that the government will seriously consider this.
There is a small light in this bleak news though, those earners who receive minimum wage from their employers will see a rise in wages in April of 6.6%. These people will be protected in some ways from this news but will still be facing catastrophic rises in the price of living just as everyone else will.
However, the job market in general seems to be doing well still, with unemployment staying low and a huge demand for new workers having broken UK records in recent months. It was once feared that there would be a major blow for employment rates but the UK defied these predictions. This could mean good news for 2022 as the country did much better than what experts thought it would in 2021.
This is particularly evident in sectors that had to close down over lockdown and so needed a whole force of new workers to help their companies when they were allowed to reopen again. These kinds of jobs are typically those that require people to go to work in person and they tend to be lower paid sectors.
The UK labour market still is not at the level it had once been, still at half a million below what it was at pre-pandemic, but this is still much better than what had been predicted of our country. We can only hope that 2022 also defies these odds and holds up better for the labour market and the average households so that they are not forced to pay out quite so much more than what experts are currently expecting them too.