Britain’s cost-of-living crisis still has nearly a year to run, with calculations showing that the average household will be £2,300 ($2,974) worse off by the time inflation eases.

A report from Grant Thornton UK LLP and Retail Economics said the UK was only three-quarters of the way through a financial squeeze that will last until May next year. It said £65 billion would be wiped off total household spending power.

Generational cost pressures have left two in five families “financially distressed” with little room to manage elevated food and energy expenses.

Richard Lim, chief executive officer at Retail Economics, said “as pandemic savings have been whittled away, the squeeze on finances has become a war of attrition for many households.”

Following an initial surge in spending after the easing of pandemic restrictions, consumers are having to cut back. Rising borrowing costs are adding to the pain, with UK two-year mortgages hitting their highest rate since 2008.

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Around half of UK consumers are cutting back on non-essential shopping and visits to pubs and restaurants, adopting “recessionary” behavior to deal with the erosion in spending power.

Nicola Sartori from Grant Thornton warned the squeeze in spending poses “formidable challenges for retail, leisure, and hospitality businesses.” Pharmacy chain Boots is set to close 300 stores across Britain, while Le Pain Quotidien announced it will shut almost all its cafes in the country as the UK arm goes into insolvency.

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