Households to be £400 worse off as tax blitz hits family finances, economists warn

Triple hit on living standards

Households are set to be £400 worse off this year as a result of a tax blitz by Rachel Reeves, economists have cautioned. The Resolution Foundation think tank has outlined a bleak outlook for living standards, citing a combination of tax hikes, soaring utility bills, and benefit squeezes.

Impact of tax policies

The Resolution Foundation predicts that a freeze on personal tax thresholds and an increase in employer National Insurance will lead to a drain of £170 per year from the average household's income. This, coupled with rising council tax and utility bills, will see families in England paying an extra £80 annually on average.

Struggle with rising costs

Furthermore, water bill hikes above inflation levels are expected to hit households even harder, with average costs surging by £120 a year. Adam Corlett, Principal Economist at the Resolution Foundation, highlighted the challenges faced by households, noting the impact of weakening wage growth and escalating housing costs.

Future outlook

Despite the current tax measures, the Chancellor has not ruled out additional tax rises in the future. However, Rachel Reeves has emphasized the importance of economic growth through various reforms to support public services and alleviate financial burdens on households.