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  • Shader Saidi

Cost of living

The OBR forecast in its Overview of the March 2022 Economic and Fiscal Outlook that Covid and the war in Ukraine will lead to an average UK inflation rate in 2022 of 7.4% (peaking at the end of the year at 9%). Real living standards are ‘set to fall by 2.2 per cent in 2022–23 – their largest financial year fall on record – and not recover their pre-pandemic level until 2024–25’.

The Chancellor was given many suggestions for helping us through these difficult times. One he has gone for is a cut in fuel duty – only the second in 20 years. So, from 6 p.m. on 23 March 2022, the duty on petrol and diesel will be cut by 5p per liter for a period of 12 months. This will amount to a £5bn saving for motorists.

Another measure adopted by Mr Sunak concerns the VAT rate paid by homeowners who install energy-saving devices. Billed very much as a Brexit dividend, VAT will be zero-rated rather than at 5% and wind and water turbines are to be specifically included. Red tape will also be tackled. This will not apply in Northern Ireland until that can be negotiated with the EU.

Incidentally, there was a tantalizing reference to a forthcoming announcement from the Prime Minister on the UK’s long-term energy security.

Finally, the household support fund budget is to double to £1bn from April 2022.

The Government has published a Cost of Living Factsheet and a Fuel Duty Factsheet.

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