The savings of millions of people in Britain are set to be wiped out by the rising cost of living, a report has warned.
The UK is set to enter a recession which will hit millions of the most vulnerable households, especially in the worst-off parts of the country, the National Institute of Economic and Social Research (NIESR) said.
More than 2.5 million households will have their savings obliterated, it found, meaning that one in five UK households will have no savings by 2024.
The institute also said the number of households living from salary to salary would nearly double to 6.8 million, from 3.9 million, or 25 per cent of all UK households, in 2024.
The Bank of England is expected to raise interest rates by up to 0.5 percentage points this week in an attempt to bring inflation under control.
Gross domestic product is set to shrink in the third and fourth quarters of this year, and in the first three months of next year.
The report warned of a “three-quarter technical recession, but a relatively shallow one”.
However, it also said there was an “increased possibility of a deeper recession”.
The threat of stagflation, a nightmare of economists, has returned for the first time since the 1970s, the report said.
Stagflation is where an economy experiences slow growth, high unemployment and rising prices.
The economy is expected to grow this year, the NIESR said, but only by 3.5 per cent, before slowing to 0.5 per cent next year — far from an emphatic bounce-back from the pandemic.
The report found that inflation will peak around the last three months of this year.
Consumer price index inflation will reach close to 11 per cent, but will fall back to 3 per cent by the end of 2023. Inflation currently stands at 9.4 per cent.
“The UK economy is heading into a period of stagflation with high inflation and a recession hitting the economy simultaneously,” said Prof Stephen Millard, NIESR deputy director for macroeconomics.
He called on the Bank of England to try to bring inflation under control — interest rates of 3 per cent will probably be necessary for that — and for the new chancellor to support households hit by the recession and cost-of-living squeeze.
Prof Adrian Pabst, deputy director for public policy at NIESR, said: “All households are facing soaring energy and food bills but too many have to resort to credit, build up payment arrears or see their savings wiped out.
“The incoming administration needs to provide immediate emergency support to the 1.2 million hardest hit households and the one in five households that will become financially vulnerable as the energy price cap is lifted and the recession begins to bite.”
The report forecast that real incomes will be permanently lower, dropping 2.5 per cent in 2022 alone.
Real incomes will be 7 per cent below where they were headed before Covid by 2026, it said.
About 3 per cent to 5 per cent of this hit will come from Brexit while 1 per cent to 3 per cent will come from energy price rises and the remainder from government policy.
The report called for the government to increase universal credit payments by £25 a week for at least six months from October, which would cost about £1.4 billion, and also to increase energy bill relief payments from £400 to £600 for 11 million poor households, with the total costs amounting to £2.2bn.
The research shows that between the impact of inflation and the refusal of the government to raise benefits in line with inflation, the 10 per cent poorest households will be about 5 per cent worse off, despite the support they have been promised on energy bills.
It makes them the worst hit of any income group in society.
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UAE currency: the story behind the money in your pockets
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ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Results:
Men's 100m T34: 1. Walid Ktila (TUN) 15 sec; 2. Rheed McCracken (AUS) 15.40; 3. Mohammed Al Hammadi (UAE) 15.75. Men's 400m T34: 1. Walid Ktila (TUN) 50.56; 2. Mohammed Al Hammadi (UAE) 50.94; 3. Henry Manni (FIN) 52.24.
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Company/date started: 2015
Founder/CEO: Mohammed Toraif
Based: Manama, Bahrain
Sector: Sales, Technology, Conservation
Size: (employees/revenue) 4/ 5,000 downloads
Stage: 1 ($100,000)
Investors: Two first-round investors including, 500 Startups, Fawaz Al Gosaibi Holding (Saudi Arabia)
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
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Dubai World Cup Carnival card:
6.30pm: Handicap (Turf) | US$175,000 | 2,410 metres
7.05pm: UAE 1000 Guineas Trial Conditions (Dirt) | $100,000 | 1,400m
7.40pm: Handicap (T) | $145,000 | 1,000m
8.15pm: Dubawi Stakes Group 3 (D) | $200,000 | 1,200m
8.50pm: Singspiel Stakes Group 3 (T) | $200,000 | 1,800m
9.25pm: Handicap (T) | $175,000 | 1,400m
A list of the animal rescue organisations in the UAE
if you go
MATCH INFO
Uefa Champions League semi-final, first leg
Barcelona v Liverpool, Wednesday, 11pm (UAE).
Second leg
Liverpool v Barcelona, Tuesday, May 7, 11pm
Games on BeIN Sports
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
How to help
Call the hotline on 0502955999 or send "thenational" to the following numbers:
2289 - Dh10
2252 - Dh50
6025 - Dh20
6027 - Dh100
6026 - Dh200
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
UAE currency: the story behind the money in your pockets
