Martin Lewis gives verdict after government launches tax hiking Budget

Jeremy Hunt acknowledged there will be a ‘very big fall’ in living standards

Martin Lewis has given his verdict on the Budget after the government unveiled its autumn statement, including billions of pounds worth of tax hikes and spending cuts.

Jeremy Hunt promised to “tackle the cost-of-living crisis” and “rebuild our economy” as he set out plans for tax rises and spending cuts.

The Chancellor said there would be a “shallower downturn” as a result of his measures but the Office for Budget Responsibility (OBR) believed the economy was “now in recession”.

Money Saving Expert founder Martin Lewis said although the Budget provided some help to those on the lowest incomes through benefit increases and extension of energy bills support, those in the “squeezed middle” will face difficulty.

“It’s going to be difficult for everybody,” Mr Lewis told BBC World at One.

“Because the cost of living crisis is biting away those in the middle who don’t get any benefits or any other payments they won’t get electricity support either except for the energy price guarantee so what the chancellor has done is the state is subsiding energy bills quite extensively.”

He added that within the small print of changes to the guarantee is that the government will undergo a consultation on a “volumetric cap” on energy use.

“Which is a posh way of saying they'll give support for lower [energy] users,” Mr Lewis said.

“Whether they can put that in place before 2024 is an interesting question.”

The Office for Budget Responsibility forecasted that more than half a million people would lose their jobs, while living standards will crash as a result of rising prices.

Jeremy Hunt acknowledged there will be a ‘very big fall’ in living standards (EPA)

Labour former minister Chris Bryant said the OBR figures show that disposable income for households “will fall, after what he’s done today, by 7 per cent over the next two years”.

The OBR's assessment said: “Rising prices erode real wages and reduce living standards by 7 per cent in total over the two financial years to 2023-24 (wiping out the previous eight years' growth), despite over £100 billion of additional government support.

“The squeeze on real incomes, rise in interest rates, and fall in house prices all weigh on consumption and investment, tipping the economy into a recession lasting just over a year from the third quarter of 2022, with a peak-to-trough fall in GDP of 2 per cent.

“Unemployment rises by 505,000 from 3.5 per cent to peak at 4.9 per cent in the third quarter of 2024.”

Mr Hunt was setting out a package of £30 billion of spending cuts and £24 billion in tax rises over the next five years.

His package is in stark contrast to his predecessor Kwasi Kwarteng’s ill-fated plan for £45 billion of tax cuts, less than two months ago, which spooked the markets, pushed up the cost of borrowing and contributed to the downfall of Liz Truss’ short-lived administration.

Mr Hunt said: “I understand the motivation of my predecessor’s mini-budget and he was correct to identify growth as a priority. But unfunded tax cuts are as risky as unfunded spending.”