1 month ago
15
ARTICLE AD BOX
The next five years will hurt disposable income and wages will stagnate further following Chancellor Rachel Reeves' budget, an influential thinktank has said.
Household disposable income, or living standards, will be the worst under any Labour government since 1955 when inflation is factored in, the Resolution Foundation said.
Politics latest: 'Everything has to be paid for': Reeves defends £40bn tax rises
The thinktank also said pay will stagnate in the middle of the parliament as higher inflation lessens pay rises and growth is slowed in an already challenging economic environment.
It will mean that in 2028, pay adjusted for inflation - real wages - is forecast to have grown on average by just £13 a week over the past 20 years, according to analysis from the foundation.
Please use Chrome browser for a more accessible video player
Previous analysis from the thinktank showed weekly wages had increased by just £16 in 14 years when inflation was factored in.
But the foundation added that households' disposable income will grow more throughout the five-year parliamentary term than the last - by an expected 0.5% a year, compared to 0.3% under the Conservative government.
Read more:
The main announcements in the budget
See if you are better or worse off using our budget calculator
Feeling blindsided? Chancellor's budget is a huge gamble
Rising prices
Prices will rise more because of the budget and growth will be weaker in part due to the rise in employer's national insurance, it added.
Inflation will rise as a result of employers passing on the national insurance contributions to customers, the introduction of VAT on private school fees and the reform of vehicle tax, the Office for Budget Responsibility (OBR) said.
The OBR predicts UK economic growth to be 1.1% in 2024, peaking at 2% in 2025 before falling to 1.85% in 2026, 1.5% in 2027, and 1.5% in 2028 before rising again to 1.6% in the final year of the parliament.
Spreaker This content is provided by Spreaker, which may be using cookies and other technologies. To show you this content, we need your permission to use cookies. You can use the buttons below to amend your preferences to enable Spreaker cookies or to allow those cookies just once. You can change your settings at any time via the Privacy Options. Unfortunately we have been unable to verify if you have consented to Spreaker cookies. To view this content you can use the button below to allow Spreaker cookies for this session only.
👉 Listen to Politics At Jack And Sam's on your podcast app👈
The OBR reached the same conclusion as the Resolution Foundation on disposable income. It also anticipates it will grow just over 0.5% a year.
Some positive response
The International Monetary Fund (IMF) has broadly welcomed the UK budget, praising the proposed debt reduction targets and tax-raising measures.
Follow Sky News on WhatsApp
Keep up with all the latest news from the UK and around the world by following Sky News
The focus on boosting growth and increasing public investment was singled out in their comment as was the move to having only one fiscal event, a budget, a year.
English (US)