Covid cut could £1200 a year from pay by 2025 according to a new report.
The analysis comes from Resolution Foundation, a think tank dedicated to improving low-to-middle incomes living standards.
“The Covid crisis is causing immense damage to the public finances, and permanent damage to family finances too, with pay packets on track to be £1,200 a year lower than pre-pandemic expectations,” warned Torsten Bell, chief executive.
Resolution Foundation published it’s new research on Thursday.
Titled, Here Today, Gone Tomorrow, it says that “the combined effects of weaker pay growth and higher unemployment will serve to prolong Britain’s living standards squeeze”.
The report showed household incomes have been growing at a slower pace even before the pandemic.
Incomes are predicted to grow just 10% during the 15 years from 2008 to 2023.
Meanwhile household income grew by as much as 40% in the 15 years leading up to the financial crisis.
The think tank warns that that households will really feel the strain next April because of reduced Universal Credit payments.
This may cause an income loss of £1000 a month.
Covid could cut £1200 a year but taxes will still go up
It also warned that a rise in tax is to be expected to compensate for the increased spending.
“While the priority now is to support the economy, the permanent damage to the public finances mean taxes will rise in future,” added Mr Bell.
“The pandemic is just the latest of three ‘once in a lifetime’ economic shocks the UK experienced in a little over a decade, following the financial crisis and Brexit,” he added.
“The result is an unprecedented 15-year living standards squeeze.”
In Mr Sunak’s Spending Review he pledged £280bn this year to get Britain through the worst of lockdown.
“But which taxes those will be, like which Brexit we can expect, are questions the chancellor left for another day.”