Britons face a record hit to living standards this year as surging inflation erodes incomes, the country's budget forecasters warned on Thursday, after finance minister Jeremy Hunt announced more pain, with tax rises now and spending cuts further ahead.

But with the country's labour market still tight, retailers are having to repeatedly hike wages and offer other benefits to attract and retain staff.

Under the Tesco scheme some 280,000 workers in the UK can receive up to 25% of their contractual pay early.

It said the idea is to help staff avoid having to take on expensive debt with high interest payments, such as pay day loans.

Tesco workers would have to pay a 1.49 pound ($1.76) fee per advance to its financial employee benefits partner Salary Finance. Staff are allowed one advance per pay period.

"We hope this helps to support colleagues, particularly in the run up to Christmas," Tesco's UK people director James Goodman said.

Tesco announced a second pay rise in a year for hourly-paid staff in October, equating to a nearly 8% rise over the year.

However, inflation hit a 41-year high of 11.1% in October.

($1 = 0.8457 pounds)

(Reporting by James Davey; Editing by Kirsten Donovan)