The UK is set for five years of lost economic growth, according to research from think tank the National Institute for Economic and Social Research (NIESR).
The NIESR said the series of shocks from Brexit, Covid and Russia's invasion of Ukraine had badly affected the economy. It added that the spending power of workers in many parts of the UK will remain below pre-pandemic levels until the end of 2024.
Despite pay increases, high inflation has forced up prices and the rising cost of living has left households throughout the UK feeling squeezed.
The NIESR forecasts that inflation, the rate at which prices rise, will remain continually above the Bank of England's 2% target until early 2025, meaning the cost of living will also continue to rise.
Jagjit Chadha, Director at the NIESR, said:
'The problem we face is that rarely has there been more urgent need, arguably never since the late 1970s, to address this country's economic problems. But at the same time rarely have they been so entrenched that it is hard to think of any quick fixes that will materially improve living standards across the income distribution within a single Parliament.
'The economy seems constrained by its pre-Covid peak in activity and is being held back by a sharp normalisation in policy rates, a sequence of persistent negative shocks to supply capacity and a marked slowing in world growth.
'Brexit has done a great service by revealing even more clearly the underlying problems in the British economy but has not yet located solutions. In truth, shock therapy has tended not to work in any country and, so far, neither has Brexit.'
Internet link: NIESR website