More worrying economic news has emerged, this time from The Institute for Fiscal Studies.
They believe that child poverty will reach 5.1 million by 2022 as households face a squeeze on wages. The think-tank believes that average pay rate won’t grow over the next two years.
The analysis says households are suffering the worst slowdown in incomes for 60 years and if planned benefit cuts go ahead, and earnings growth slow, inequality will start to rise over the next five years.
The information comes from a new report written by the IFS, which details median household income won’t grow in the next two-year period. Five years’ down the line income will grow a mere four per cent. As ever low-income households will probably struggle the most.
The IFS have used OBR (Office for Budget Responsibility) data forecast to conclude these findings. According to the IFS, the slowdown in income growth is “unprecedented in at least the last 60 years”.
Tom Waters, an author of the report and a research economist at IFS, said: “If the OBR’s forecast for earnings growth is correct, average incomes will not increase at all over the next two years. Even if earnings do much better than expected over the next few years, the long shadow cast by the financial crisis will not have receded – average incomes in 2021–22 are still projected to be £5,000 a year lower than we might have reasonably expected back in 2007–08.”
Andrew Hood, senior research economist at the IFS, said: “Weak earnings growth combined with planned benefit cuts means that the absolute poverty rate among children is projected to be roughly the same in 2021–22 as it was back in 2007–08. In the decade before that, it fell by a third.
“Tax and benefit changes planned for this parliament explain all of the projected increase in absolute child poverty between 2014–15 and 2021–22.”
As austerity continues to bite the future for the UK does not look very positive at all.