While two thirds of Londoners are expecting a pay rise this year, a new study shows the soaring cost of living will still leave many worse off.

Research by independent price comparison website uSwitch.com shows after this year's pay rises, the capital's workers will take home an extra £44 a month on average.

However, the average increase in monthly expenditure is £148 - meaning there is a large deficit per household, leaving the nation as a whole £21bn out of pocket.

Those in London are slightly better off than the rest of the nation with an average expected pay increase of 4.1 per cent compared to an anticipated 3.4 per cent rise elsewhere.

The survey showed that almost two thirds of pay rises expected in the capital would be below the RPI (4.2 per cent) while a third of London's workers are expecting no pay rise at all.

The calculations are based on the rocketing price of household bills, including petrol, energy, food, mortgages, car insurance and council tax - and lower-than expected pay rises already received or anticipated.

Ann Robinson, of uSwitch.com, said: "This is crunch time for UK households as we face up to a downturn in the economy, the news of below-inflation pay rises and the reality of having less money in our pockets. We are working harder, but are certainly not getting any wealthier.

"Hikes in taxes, the cost of food, utility bills and social contributions over the last decade have outpaced the overall rise in income levels, to push disposable incomes in the UK to their lowest level in over a decade."

The research comes ahead of Wednesday's Budget, which is expected to add to Britain's tax bills, including increased tax widely expected to hit alcohol and "gas-guzzling" cars.

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