Analysis

A 0.1% fall in GDP may not mean much to most people – but it piles the pressure on the Treasury

We are only in the foothills of the economic pain to come, writes Anna Isaac

Friday 13 May 2022 11:52
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<p>Rishi Sunak, left, and Boris Johnson will have to deal with the problems to come for households</p>

Rishi Sunak, left, and Boris Johnson will have to deal with the problems to come for households

The UK economy shrank in March and it is easy to paint a picture of catastrophe. It’s a problem, because with forecasts suggesting this year will see the biggest fall in living standards since records began in 1956, this is really only just beginning to play itself out in the data.

With some quick to blame the cost of living crisis for rattling consumer confidence, it’s worth adding a note of caution: this data was from March. The new price cap for energy bills, which rose more than 50 per cent or an average of about £700 per household per year, only came into force in April, since when consumers’ confidence over finances has plummeted considerably.

Put simply, while many of the poorest households are already suffering, we are only in the foothills of a mountain of troubles to come over choices such as heating, eating or not managing at all.

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