Household incomes will rise at the slowest rate on record during the course of this parliament, amid stagnating wages, high taxes and plummeting employment, analysis has found.
The Resolution Foundation think-tank said that disposable income – how much a household has to spend after taxes and other costs – would rise by just 0.1 per cent a year – the lowest over a parliament on record.
The previous record was between 2015 and 2019 under David Cameron and Theresa May, when the annual rise was 0.3 per cent.
Adam Corlett, principal economist at the Resolution Foundation, said: “Last week the chancellor hailed his budget as marking a ‘new age of optimism’, but the economic reality facing families across Britain is far more sobering.
“The official economic outlook is for Britain to experience the weakest parliament for income growth since records began, with ‘growth’ of just 0.1 per cent a year. Worse still, we’re currently under-performing against even this terrible forecast.
“The current parliament of stagnating, or even falling, incomes is driven by historically weak pay growth and falling employment. Of course, Britain can — and must — turn this outlook around. But doing that requires a proper economic strategy… that has the goal of higher living standards.”
Rishi Sunak yesterday sought to highlight the government’s increase of the national living wage by 6.6 per cent, to £9.50 per hour – and told MPs that increasing the amount of money people can keep from Universal Credit payments would provide a “significant cash benefit”.
But the chancellor’s budget has drawn stringent criticism from Tory backbenchers unhappy with the tax burden rising to its highest since the early 1950s, after hikes in national insurance and corporation tax.
In a Commons debate yesterday, Sir Edward Leigh – a senior backbencher – said: Sir Edward: “Bear in mind what happened in 1945. We presided in the coalition government during the war over the highest-taxing government in history, the most regulating government in history… what was the result? It was a Labour government.”
High tax burden
Sunak told MPs on Monday that he hopes to reduce the tax burden by the next general election.
But he denied he was raising taxes now in order to cut them in order to win votes, and said rises also had to be seen in the context of the public services delivered.
“We can look at the taxes and, yes, people are paying more, they’re going to pay the new health and social care levy, no-one is pretending otherwise, that takes money from people, that’s why in an ideal world I would prefer not to have to put taxes up on people,” he said.
“But you do get something for that money. It’s all very well to just look at the taxes without looking at what you’re getting.
“So, you can talk about living standards by just looking at the tax side, I think that’s probably slightly unfair because people’s quality of life is also influenced by the quality of the public services that they get.”