Household incomes expected to remain below pre-pandemic levels for two years

UK households will remain worse off than before the pandemic for another two years, according to the Office for Budget Responsibility (OBR).

Charlie Bean, a former Bank of England deputy governor and board member of the OBR, told MPs that household disposable income would not return to 2019 levels until the second half of 2023.

Officials also expect the UK’s productivity growth to remain low.

“We do have a modest pickup in productivity growth [in our forecast]. But it’s not back up to anything like the pre-epidemic rates,” Bean said.

Forecasts issued by the OBR alongside last week’s Budget showed that household incomes would be weighed down by inflation over the next two years, before rising by just 1.3% a year on average by the middle of the decade, the Guardian reports.

The Institute for Fiscal Studies (IFS) took a similar view, saying that the outlook for wages remained weak and it expected inflation and higher taxes to negate many wage rises.