Household (budgets) to feel the heat in 2022

Against a backdrop of higher inflation, a jump in utility prices and rising taxes, household budgets will come under strain in the coming months. Indeed, we are forecasting the fastest contraction in real wages since the aftermath of the Global Financial Crisis. But we don’t think the impact on households’ overall real incomes will be as big. The government could announce new support measures, while the strong labour market and big stock of household savings should to help cushion the blow.