Hunt Warns of Challenges as Living Standards Plunge

Families face "real challenges", UK’s Chancellor Jeremy Hunt has warned, as government forecasters predict the biggest drop in living standards since records began.

The Office for Budget Responsibility says household income will fall by 7% over the next 18 months, the BBC said on Friday.

The chancellor said tax rises and a spending squeeze in his autumn statement would help tame inflation which he said had caused the drop.

But Labour said fairer choices about tax could have been made. Shadow chancellor Rachel Reeves described the emergency budget measures as "an invoice for the economic carnage" created by the policies of former PM Liz Truss.

In a somber statement Thursday lasting just under an hour, Hunt undid much of the tax-cutting mini-budget unveiled by his predecessor as chancellor, Kwasi Kwarteng, only 55 days ago.

It was deliberately stripped of surprises and political theater, with many of the announcements having been trailed in the media beforehand.

Hunt told the BBC his plan would bring down soaring prices, while protecting public services. "These are real challenges for families up and down the country," he said, adding: "I'm not pretending these aren't going to be difficult times, but there's a plan, there's hope - and if we follow this plan, if we stick with it, we can get through to the other side."

In the next two years, before the next general election is due, there will be further support for households and extra money for schools, the NHS and social care in England. But after 2025 spending cuts are set to kick in for many departments.

The Resolution Foundation think tank said the Autumn Statement piled further pressure on "the squeezed middle" earners. But it said increasing benefits in line with prices would make a "huge difference to those on low-to-middle incomes".

Hunt denied that he had been forced to raise taxes and reduce spending because of the turmoil caused by Truss's mini-budget.