Families are OFFICIALLY suffering the worst pressure on record

Families are officially suffering the worst pressure on record after real disposable incomes fell for the fourth consecutive quarter.

Finances again began the year struggling to keep pace with rising inflation, making it the longest string of declines since official figures began to be collected in 1955.

Household real disposable income fell 0.2 percent between January and March as income growth of 1.5 percent was outpaced by household inflation of 1.7 percent.

Household finances have been under pressure for a year now as the cost of energy, food and other goods has skyrocketed in the wake of Covid and the raging Ukraine crisis.

Meanwhile, HMRC figures have shown almost two million people have been suckered into the higher and additional tax rates over the past three years.

To underscore the growing burden on workers, 6.1 million are expected to pay income taxes of 40 per cent or 45 per cent in 2022/23.

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Household real disposable income fell 0.2 percent between January and March as income growth of 1.5 percent was outpaced by household inflation of 1.7 percent. It is the longest string of cases since official figures began to be compiled in 1955

Two million have been sucked into higher tax rates in the past three years

Almost two million people have been sucked into the higher and additional tax rate in the past three years.

HMRC figures underscore the growing burden on workers, showing 6.1million are expected to pay 40 per cent or 45 per cent income tax in 2022/23.

There are expected to be 5.5 million higher income taxpayers in 2022/23, up 43.9 per cent on 2019/20, according to HMRC.

There are expected to be 629,000 additional taxpayers, an increase of 49.4 per cent over 2019/20.

In 2019/20, the total number of taxpayers with higher and additional rates combined was nearly 4.3 million.

Higher income taxpayers are expected to account for 16.2 percent of the total income taxpayer population in 2022/23, while additional taxpayers account for around 1.9 percent.

There are expected to be 5.5 million higher income taxpayers in 2022/23, up 43.9 per cent on 2019/20, according to HMRC.

There are expected to be 629,000 additional taxpayers, an increase of 49.4 per cent over 2019/20.

In 2019/20, the total number of taxpayers with higher and additional rates combined was nearly 4.3 million.

Higher income taxpayers are expected to account for 16.2 percent of the total income taxpayer population in 2022/23, while additional taxpayers account for around 1.9 percent.

Sir Steve Webb, a former Liberal Democrat Pensions Secretary who is now a partner at consultancy firms LCP (Lane Clark & ​​Peacock), said: “Paying higher taxes used to be reserved for the wealthiest, but this has changed dramatically in recent years.

“The starting point for higher tax rates has not kept pace with rising incomes and the current five-year freeze on thresholds has accelerated this trend.

“People who wouldn’t consider themselves particularly rich can now easily count on an income tax rate of 40 percent, and around one in five of all taxpayers will soon be in the higher tax bracket.”

According to HMRC, there were a total of 31.5 million income taxpayers in the 2019/20 tax year, a number that is expected to rise to 34 million in 2022/23.

The latest figures came as the ONS confirmed its earlier estimate that GDP grew 0.8 percent in the first quarter of the year – although it is thought to have stalled since.

That means a drop in growth from 1.3 percent in the previous three months, but means that GDP remains 0.7 percent above the last quarter of 2019, before the pandemic hit.

Darren Morgan, director of economic statistics at the ONS, said: “Our most recent estimate for first quarter economic growth is unrevised overall, showing that the UK has continued to recover from the pandemic.

“Both household incomes and spending increased in cash terms in the first quarter, leaving the savings rate flat.

“However, taking inflation into account, incomes have fallen again for the fourth consecutive quarter.”

The more detailed breakdown of GDP also shows that business investment fell by a downwardly revised 0.6 percent in early 2022, 9.2 percent below its pre-pandemic level.

There are growing fears that the cost-of-living crisis could plunge the UK into a recession – defined by two consecutive quarters of falling manufacturing – as skyrocketing inflation causes households and businesses to rein in spending.

Inflation has already reached a 40-year high of 9.1 percent and is expected to rise above 11 percent in the autumn.

Bank of England Governor Andrew Bailey said last night that rising inflation will hit the UK harder than any other major economy during the current energy crisis and that manufacturing is likely to ease earlier and be more intense than others.

On a monthly basis, GDP is already showing the impact of the cost crisis, with the latest figures showing production falling 0.1 percent and 0.3 percent in both March and April.

The economy as a whole is expected to contract in the second quarter, and experts fear that the fall energy price ceiling hike could lead to a fall in output in the following three months.

Martin Beck of the EY Item Club said: “Pressure on household purchasing power will continue as both the energy price cap rose by more than 50 per cent and personal taxation in the second quarter, during a another large increase in the energy price cap in October probably.

Boris Johnson (pictured at today's NATO summit in Madrid) revealed he has held talks with other world leaders on removing trade barriers, with oranges and bananas among the products that could be made cheaper

Boris Johnson (pictured at today's NATO summit in Madrid) revealed he has held talks with other world leaders on removing trade barriers, with oranges and bananas among the products that could be made cheaper

Boris Johnson (pictured at today’s NATO summit in Madrid) revealed he has held talks with other world leaders on removing trade barriers, with oranges and bananas among the products that could be made cheaper

“With savings rates already below ‘normal’ levels, hopes of avoiding a consumer recession rest on those households who have accumulated ‘excess’ savings during the pandemic and are spending a good chunk of those funds.”

Other ONS data showed that Britain’s current account deficit – the difference between the value of the goods and services the UK imports and the goods and services it exports – widened to a record £51.7 billion, or 8, 3 percent of gross domestic product.

According to the ONS, this was the largest backlog since records began in 1955.

However, she cautioned against the numbers, saying there were implications of post-Brexit changes in data collection on trade in imported goods and foreign direct investment, which she is currently studying.

https://www.soundhealthandlastingwealth.com/uncategorized/families-are-officially-suffering-the-worst-squeeze-on-record/ Families are OFFICIALLY suffering the worst pressure on record

Brian Ashcraft

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