Households will get poorer and pay more taxes in coming years, think tank says
Real wages in the UK will only return to 2008 levels in 2026 despite lower inflation, the Resolution Foundation, an independent think tank, reported this week in its analysis of the new budget.
according to reportthe country is on the right track to “disastrous decade” stagnant incomes and high taxes, with cuts in public services.
The publication pointed out that real wages fell at an annual rate of 3.9% in January, noting that the overall situation for wages is “one of the long-term wage stagnations.”
The decline in household disposable income this year and next is the worst in a century, the think tank pointed out.
“The UK economy remains stuck in deep funk – with people being helped to work but getting poorer, and paying more tax but seeing public services cut,” he wrote.
UK should have crossed “the biggest energy and inflationary shock since the 1970s, while avoiding a recession, with unemployment peaking at just 4.4%”, Added resolution foundation.
According to the study, taxes as a percentage of GDP are expected to reach 37.7% by the end of the forecast period, which is a 70-year high and a 4.7% increase since 2019-20.
The freezing of income tax thresholds since 2022-23 means typical households will be £1,110 ($1,337) worse off by 2027-28 when the freeze ends, he noted .
Torsten Bell, chief executive of the Resolution Foundation, said that “Jeremy Hunt’s first budget was a much bigger deal than many had expected, combining improvements in the dire economic and fiscal outlook with a significant package of measures aimed at boosting long-term growth in general, and the size labor in particular.
“But looking back, the UK’s underlying challenges remain largely unchanged. We invest too little and grow too slowly. The standard of living of our fellow citizens is stagnating. We are asking them to pay more taxes, while cutting public services,” he concluded.
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