Budget 2021: IFS Predicts ‘Real Pain’ for Low-income Households

THE GUARDIAN: Thinktank’s verdict on Rishi Sunak’s budget says tax rises and inflation will mean falling living standards for many

Rishi Sunak in Bury, the day after delivering the budget. Photograph: Lindsey Parnaby/AFP/Getty Images
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

Living Standards to Be Lower in 2015 Than in 2010, IFS Warns

George Osborne, Chancellor of the Exchequer

THE GUARDIAN: Delivering its judgment on George Osborne's autumn statement, Institute for Fiscal Studies backs claims by Ed Balls that family budgets are being squeezed hard

Britain's leading experts on tax and spending have said that living standards would be lower at the end of the current parliament than at the start as they backed claims by the shadow chancellor Ed Balls that family budgets were being squeezed hard under the coalition.

Delivering its judgment on George Osborne's autumn statement, the Institute for Fiscal Studies took issue with the way Labour had calculated its estimate of a £1,600 loss to the average family in the three years since the coalition came to power in 2010 but said it was "pretty consistent" with survey data showing a big drop in household incomes between 2009-10 and 2011-12.

Paul Johnson, the IFS's director, said there was a lack of reliable figures for the current year, but added: "We do know from household surveys that income fell sharply in 2010 and 2011. It is almost certainly significantly lower now than it was in 2010.

"And while it should start to grow it will surely still be below its 2010 level by the time we get to the election in 2015." » | Larry Elliot and Philip Inman | Friday, December 06, 2013