An estimated 1.5 million UK households face being unable to pay food or energy bills this year, a think tank has warned, as the UK falls into recession.
The National Institute of Economic and Social Research, publishing its latest quarterly UK Economic Outlook, said real incomes were likely to decline by 2.4% this year, followed by a small rise in unemployment in 2023, to 5.1%.
GDP, meanwhile, was forecast to increase by 3.5% in 2022, after declining in the third and fourth quarters, before growing by just 0.8% in 2023 and 0.9% in 2024. A recession is defined as two consecutive quarters of economic decline.
It noted: “The combination of shocks – Brexit, Covid-19 and the recent shocks to energy prices – is set to leave the incomes of people in the UK permanently lower.”
In particular, the NIESR estimates that 1.5m households will see food and energy bills greater than their disposable income in the 2022-23 financial year, as rising prices and higher taxes “squeeze” domestic budgets.
To help cushion the shock, it called on the government to provide emergency support through a £250 one-off cash payment for the UK’s 11.3m lower-income households, and a £25 per week uplift in Universal Credit between May and October 2022. Combined, both measures would cost around £4.2bn.
“Without this targeted support, we expect a further increase in extreme poverty,” the NIESR warned. It added that around 500,000 households would face a choice between eating and heating in 2022-23, while around 250,000 would “slide into destitution”, taking the total number to around 1m.
