Brits Brace For ‘Perfect Storm’ Of Tax Rises, Spiraling Inflation, And An Energy Crisis

• British households are facing the worst cost of living crisis for decades, as soaring inflation, declining real wages and an energy crisis eats into household incomes. 
• Inflation in the U.K. has soared to levels not seen for decades, with the latest reading hitting an annual 5.4% for December, the highest it has been since March 1992. 
• Welfare payments that are linked to inflation will increase by 3.1% in April, the government announced this month, in line with the Consumer Prices Index reading from September 2021. State pensions will also be increased by 3.1%. 
• The latest official data showed that average earnings, when adjusted to account for inflation, fell by around 1.0% in November from a year earlier, the first decline in wages since the height of the coronavirus pandemic. 
• Meanwhile, taxes on earned income are set to increase by 1.25 percentage points from April to help fund health and social care costs. It’s a move that Prime Minister Boris Johnson is reported to be pushing ahead with, despite pressure to U-turn from lawmakers within his party. 
• Last Thursday saw Ofgem, the regulator for the U.K. energy sector, raise its energy price cap by 54%, meaning millions of households’ annual energy bills will increase by around £700 from April. Given the U.K.’s reliance on natural gas as an energy source, the country has been hit particularly hard by a gas shortage that pushed wholesale prices up to record highs across Europe last year.

(Source: CNBC News)