The UK has entered a "new era" of higher taxes, according to the Institute for Fiscal Studies.

The think tank's director Paul Johnson said that middle earners were "set for a shock" with taxes going up and prices soaring.

In last week's Budget, Chancellor Jeremy Hunt announced plans to increase taxes to shore up the public finances and to provide help with energy bills.

The toughest decisions on spending cuts had been delayed until after 2024, the IFS said in its analysis of the plans.

Mr Johnson warned that living standards were facing the "biggest fall in living memory" due to weak economic growth, an ageing population and high levels of government borrowing in the past.

"The truth is we just got a lot poorer. We are in for a long, hard, unpleasant journey; a journey that has been made more arduous than it might have been by a series of economic own goals," Mr Johnson said to the BBC.

Grim economic backdrop

He described the economic backdrop as "grim", and said the tax burden was unlikely to return to its pre-pandemic average "for several decades".

Meanwhile, the head of a UK business lobby group has told the BBC that the Budget offered no plan to revive economic growth.

Tony Danker, director-general of the Confederation of British Industry, said the Chancellor had instead prioritised stability.

He said that, without higher growth, the UK would not afford the growing cost of health and social care.

Mr Hunt has laid out £55billion of spending cuts and tax rises aimed at bringing down soaring prices while protecting public services.

Mr Danker said the chancellor's statement had been "all about fighting inflation and getting the government budget in some decent shape and that does need to be done".

Low growth

But he added that "there was really nothing there that tells us the economy is going to avoid another decade of low productivity and low growth".

The director-general will tell the CBI conference in Birmingham today that the UK should use immigration to solve worker shortages and boost economic growth.

He will call on politicians to be "practical" about immigration.

Mr Danker will also say the UK should enable "economic migration" in areas where skilled workers cannot be found.

FTSE 100

The UK's top share index, the FTSE 100, dipped by 22 points to 7,362 shortly after opening this morning, following Friday's 38-point gain.

Brent crude futures were 0.09% lower at $87.54 a barrel.

Companies reporting today

  • Full-year results: Compass Group, Virgin Money UK

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