British households are on course to be worse off at the end of a parliamentary term for the first time in modern history, leading economists have warned, after Jeremy Hunt’s £20bn autumn statement tax cuts favoured the richest 20% of earners.
A day after the chancellor’s speech, the Resolution Foundation thinktank said sluggish economic growth, persistent inflation and higher taxes meant the average household would be £1,900 poorer by January 2025 than they were in December 2019.
...
The Institute for Fiscal Studies said the chancellor had “almost one-for-one” paid for tax cuts by slashing spending on public services, after refusing to top up funding to protect against rising inflation.
Paul Johnson, the IFS director, said Hunt’s plans to were likely to inflict more “pain” than the austerity drive undertaken by George Osborne in the 2010s.
“George Osborne managed to get the size of the state back down after the financial crisis. That was painful. Doing it again will be more painful still,” he said. “Mr Osborne made his cuts after a decade of big spending increases. Mr Hunt, or his successor, will have no such luxury.”
The Resolution Foundation said the top fifth of households in Britain would gain most from Hunt’s tax cuts. It said they would benefit by £1,000 on average, five times the gains of the bottom 20%, who would be only £200 better off from measures that include a 2p cut in national insurance.