A forecast by the Office for Budget Responsibility (OBR) revealed on Thursday that the standard of living in the UK will fall by 7% in the next two years.

"Rising prices erode real wages and reduce living stand by 7 percent in total over the two financial years to 2023-24 (wiping out the previous eight years’ growth), despite over 100 billion pounds [$118 billion] of additional government support," the forecast read.  

The fueling cost of gas and electricity for households could setback the British economy's GDP eight years behind, the report states, adding that a decrease in real wages and a continued rise in interest rates has a heavy toll on consumption.

The consequences of this are that a recession is expected to last for more than a year as the UK's GDP may decrease by 2%, and unemployment might grow from 3.5% to 4.9% in the third quarter of 2024.  

Read more: Recession in UK to last 2 years, Bank of England hikes rates

Being one of Europe's major economies, the UK has traditionally relied on Russia for cheap gas, China for commerce, and the US for security. 

But since the EU and the UK began to implement a series of sanctions against Russia, the whole balance upon which the mechanisms for wealth accumulation were founded got disrupted. 

On October 19, it was reported that inflation in the UK economy rose back beyond 10% in September, and that the Consumer Prices Index increased to 10.1% on an annual basis, up from 9.9% in August.

On November 3, the Bank of England raised interest rates to 3%, increasing from 2.25% - the biggest increase since 1989, as it warned of a "very challenging" outlook for the economy.

As the economy slows down sharply, soaring inflation limits consumer spending on non-essential items. The central bank predicts that the UK entered a recession in the third quarter of 2022, and the recession will be ongoing until mid-2024, the regulator said.

Earlier today, the government unveiled a £55 billion ($66 billion) fiscal plan aiming to plug a gaping hole in the public finances and restore Britain's economic credibility as the country teeters on recession.

In his much-anticipated first Autumn statement, Finance Minister Jeremy Hunt proposed around £30 billion in spending cuts and £25 billion in tax increases.

The measures include a six-year freeze on income tax thresholds and lowering the top rate of income tax to £125,000 — moves directly opposed to the major cuts touted in September’s catastrophic mini-budget. “Unfunded tax cuts are as risky as unfunded spending,” Hunt told the House of Commons.

Read more: Britain warns of incoming budgetary trouble after Truss debacle