Rishi Sunak’s decision to raise taxes on workers amid high levels of inflation will squeeze living standards next year, causing “real pain” for low-income households, the Institute for Fiscal Studies has warned.
Issuing its verdict after the chancellor’s budget on Wednesday, the UK’s leading tax and spending thinktank said a middle earner was likely to be worse off next year as high rates of inflation and tax rises negate weak growth in wages.
It said that while Sunak was promising a new age of optimism, voters might not get much feelgood factor after the chancellor announced £40bn of tax increases this year – the largest increase since 1993.
Paul Johnson, the director of the IFS, said the outlook for living standards jarred with the chancellor’s upbeat tone. “Over the next several years a combination of tax increases and high inflation will mean very slow growth in living standards,” he said. » | Richard Partington, Economics correspondent | Thursday, October 29, 2021
