Chancellor paints a bleak picture for struggling families
Friday, November 25, 2016
Families will be hit hard by the impact of the Chancellor’s Autumn Statement, economists have warned.
Families will be hit hard by the impact of the Chancellor’s Autumn Statement, economists have warned.
An analysis by the Resolution Foundation found there will be a significant effect on family finances, highlighting lower earnings growth, higher inflation and ongoing welfare cuts.
The foundation has calculated that the £59 billion impact of Brexit (as calculated by the Office for Budget Responsibility) and the Chancellor’s decision to increase investment, will lead to £122 billion in extra borrowing.
The report finds that the increase in borrowing set out in the Autumn Statement is so high that national debt as a percentage of GDP is expected to be greater at the end of the current parliament than it was at the beginning.
The economy is also expected to grow slowly next year. The foundation says while measures to raise the National Living Wage, provide some in-work support through Universal Credit, fund more affordable homes and ban up-front rental fees are welcome, they fall short of the action needed to make a big difference to living standards and support ‘just managing’ families.
Torsten Bell, director of the Resolution Foundation, said, ‘Most of the initial reaction to the Autumn Statement has understandably focused on the big hit to the public finances, but just as important is the very real impact on family finances.
‘The combination of lower growth, higher inflation and the Government’s decision to press ahead with big welfare cuts means that households risk experiencing even slower income growth in this parliament than they saw in the aftermath of the financial crisis. But unlike the last parliament, it will be low- and middle-income households who feel the tightest squeeze this time round.’
Early years organisations and teaching unions were left bitterly disappointed by the Chancellor’s Autumn Statement.
While an announcement regarding extra early years funding had been anticipated, it was not forthcoming.
Teaching unions also expressed their concern that the only new funding available has been earmarked for the expansion of existing grammar schools, with £50 million of new capital funding announced for 2017-18.
