Budgets & fiscal events· Economy and public finances The Chancellor can use the tough economic backdrop to his Autumn Statement to make his mark on the direction of government 4 November 2016 by Matthew Whittaker A new Chancellor’s first fiscal statement is always a big deal, but the relish with which they approach it inevitably depends on the circumstances underpinning their arrival. Those entering Number 11 off the back of election victory – with a fresh mandate in hand – have the opportunity to set a clear tone for the … Continued READ MORE
Brexit & trade· Economic growth Amid all the Brexit uncertainty, a clearer picture is emerging 21 September 2016 by Matthew Whittaker Among the many things that feel different in the post-referendum world, there is an unusual air of anticipation surrounding what would previously have been considered relatively underwhelming statistical releases. Today we were treated to a quartet of such publications. On the face of it they appear to point in different directions, allowing commentators on both … Continued READ MORE
Firms· Prices & consumption· Economic growth Businesses’ Brexit concerns haven’t stopped us shopping 18 August 2016 by Matthew Whittaker Business are worried about Brexit, but consumers haven’t got the memo. That’s the state of play from the limited evidence that has emerged since the vote on 23 June. In the short term firms and people can have different views about its impact. But, just as in the long run we are all dead, so … Continued READ MORE
Macroeconomic policy The Bank has acted, but the real drama is yet to come 4 August 2016 by Matthew Whittaker While the time since the UK voted to leave the EU can still be measured in weeks rather than months, evidence is starting to come in on the extent to which that decision is impacting on the economy. It will be a while longer before we get hard data on output, but the picture painted … Continued READ MORE
Brexit & trade· Economy and public finances Five charts that tell the story so far of the post-referendum economy 20 July 2016 by Matthew Whittaker and David Finch Perhaps the only certainty in relation to the UK at the moment is that things look very uncertain. Longer-term, much will depend on just what Brexit ends up meaning. Shorter-term, most economists expect some form of demand-led slowdown – with general business and consumer uncertainty pulling back on investment and spending and sharp falls in … Continued READ MORE
Economy and public finances· Macroeconomic policy Responsibility for avoiding a post-Brexit downturn rests as much with our politicians as our economists 18 July 2016 by Matthew Whittaker Despite boasting an impressive track record for inaction in recent years, the Monetary Policy Committee’s decision to leave rates on hold last week still surprised many. Expectations had built following Mark Carney’s statement on 30 June that post-Brexit “deterioration” in the economic outlook meant that “some monetary policy easing [would] be required over the Summer”. … Continued READ MORE
Living standards· Brexit & trade Are we set for a Brexit-induced cost of living crisis? 28 June 2016 by Matthew Whittaker What impact will Brexit have on living standards? It is of course far too early to make any sensible assessment about the longer-term picture, particularly as this will depend on the details of the UK’s new relationship with Europe. But clearly the world has already changed. The business and consumer uncertainty generated by last week’s … Continued READ MORE
Living standards· Tax· Welfare The new financial year: No fireworks yet but is pain brewing for low-to-middle income households? 6 April 2016 by Matthew Whittaker Prior to the government’s tax credit U-turn in last year’s Autumn Statement, 6 April 2016 was set to be a red letter day – representing the point at which more than 3 million tax credit recipient families would face the reality of reductions in their annual awards of £1,300 on average. Having shelved the cuts … Continued READ MORE
Household debt· Wealth & assets Why defusing the debt bomb means dealing with distributions 26 December 2015 by Matthew Whittaker Following the near-collapse of the global financial system back in 2008, it appeared only a matter of time before the UK’s household debt time bomb went boom. In aggregate, households owed just shy of 1.6 times their total income, up from a ratio of just over 1 at the start of the century. That there … Continued READ MORE
Housing Dealing with the housing aspiration gap 19 December 2015 by Matthew Whittaker Britain’s reputation as a nation of home-owners is under threat. While it’s true that just under two-thirds (65 per cent) of us own our own place, the home-ownership rate has fallen from 73 per cent since 2007. This downward trend has occurred despite the proportion owning their home outright continuing to rise gently in recent … Continued READ MORE
Living standards· Incomes· Prices & consumption Five charts that show who spends what in the UK 8 December 2015 by Matthew Whittaker The issue of living standards has – rightly – risen up the agenda in recent years, following the unprecedented six year-pay squeeze and severe hit to household incomes in the years after the financial crisis of 2008. Yet too little attention is given to the other side of the living standards equation: the cost of … Continued READ MORE
Budgets & fiscal events· Intergenerational Centre Skewed Britain is no country for young men 25 November 2015 by Matthew Whittaker Against all expectations, George Osborne managed to deliver something of a giveaway with his combined Autumn Statement and Spending Review. That might seem hard to believe given that day-to-day UK government spending is set to be reduced by more than £10bn over the next four years. For many departments that means cumulative budget cuts since … Continued READ MORE
Low pay· Labour market· Pay Lifting the wage floor increases the urgency for securing productivity gains 18 November 2015 by Matthew Whittaker The welcome introduction of a significantly higher wage floor from April 2016 is set to boost the pay of around 6 million workers. But it will pose adaptation challenges for employers, particularly in lower paying sectors such as retail and hospitality. A simple thought exercise implies that maintaining a broad adherence to the international relationship … Continued READ MORE
Labour Market Outlook· Labour market· Pay How is the UK’s pay recovery being shared? 16 November 2015 by Matthew Whittaker After 12 straight months of real-terms growth, the question on pay has shifted from ‘when will it return?’ to ‘how strong and sustainable is it’? Until now, we’ve been unable to dig any deeper to consider the additional question of ‘who’s gaining?’ but we’ll get some early clues from official data out this Wednesday. Could … Continued READ MORE
Economy and public finances Seven charts that show the changing shape of the state in Britain 13 November 2015 by Matthew Whittaker Seven charts that show the changing shape of the state in Britain What should the state do? That’s the question we asked at our Shrinking Pains event on Tuesday morning. Six years into a planned ten-year period of fiscal consolidation, we took a step back – with the help of Ken Clarke, Jill Rutter and … Continued READ MORE
On borrowed time? The need to make the most of the ‘window of opportunity’ provided by low interest rates 4 August 2015 by Matthew Whittaker More than six years after the Bank of England’s base rate was cut to 0.5 per cent, interest rate rises finally appear to be back on the agenda. There may be good reasons for thinking that modest and gradual action will soon become appropriate, but the debt overhang associated with the pre-crisis credit boom continues … Continued READ MORE
Budgets & fiscal events· Economy and public finances· Political parties and elections How far apart are the Conservatives and the Lib Dems on fiscal policy? 28 April 2015 by Matthew Whittaker Amid recent discussion of the key role that parties such as UKIP and the SNP might play in ‘propping up’ a minority government after 7 May, less attention appears to have been given to the continued potential leverage of the Liberal Democrats. Of course, any future negotiations will revolve around a multitude of issues and … Continued READ MORE
Living standards How far have living standards recovered? 18 March 2015 by Matthew Whittaker What’s the truth behind the Chancellor’s Budget claim that “the latest projections show that living standards will be higher than when we came to office”? With so many alternative ways of capturing ‘living standards’ the answer is that they might be higher, lower, or just about the same. Given that this issue is going to … Continued READ MORE
Living standards· Political parties and elections Living standards in the downturn and recovery: the backdrop to the election 12 March 2015 by Matthew Whittaker After six long years, average pay is rising. The gains are currently modest, but momentum is expected to build in the coming months (thanks in no small part to falling inflation). And there’s evidence that household incomes have started to recover too. The best data on this is significantly out of date but, buoyed by … Continued READ MORE
Pay Boom time for wages? How realistic is a doubling of wage growth by the end of the year 17 February 2015 by Matthew Whittaker Last week’s Bank of England Inflation Report raised the prospect of a boom time for wages in the coming year. By the end of 2015, the Monetary Policy Committee (MPC) projects that average weekly earnings will be growing at an annual rate of 3½ per cent, up from a forecast of 3¼ per cent back … Continued READ MORE
Budgets & fiscal events· Public spending· Economy and public finances The high road or the low road? What a balanced current budget by 2017-18 does and does not mean 12 January 2015 by Adam Corlett and Matthew Whittaker Taken at face value a new Charter for Budget Responsibility, with a goal of eliminating the structural current deficit by 2017-18, has potentially significant implications for the parties’ fiscal plans. This applies most to Labour – given their separate pledge to do this by 2019-20 – and to a significant extent for the Liberal Democrats. … Continued READ MORE
Living standards· Incomes· Labour market What’s in store for household incomes in 2015? 27 December 2014 by Matthew Whittaker The 2015 election has been billed by many as the ‘living standards election’, meaning that we can expect much debate in the coming months on just how households are faring and whether economic growth is translating into income growth. To date though, most attention has focused on wages instead of incomes. The six-year real-terms pay … Continued READ MORE
Pay Could we be set for two decades of lost pay growth? 12 December 2014 by Matthew Whittaker Rarely have questions of household living standards and the shape of the public finances been so interwoven. The Autumn Statement – or, more specifically, the OBR’s Economic and Fiscal Outlook – identified a £25bn shortfall in tax revenues by 2018-19 relative to the projections in place at the time of Budget 2014. This is a … Continued READ MORE
Public spending· Economy and public finances· Political parties and elections Assessing the post-election implications of the parties’ different fiscal stances 5 December 2014 by Matthew Whittaker Our recent briefing note In The Balance set out some indicative figures for public finances in the next parliament based on our interpretation of each of the three main parties’ highly sketchy (to date) outlines of their preferred trajectories. This note updates this work based on the new OBR figures released alongside the Autumn Statement. … Continued READ MORE
Budgets & fiscal events· Public spending· Economy and public finances The drama of the Commons took a back-seat to the economic musings of the OBR today 3 December 2014 by Matthew Whittaker Unusually for a fiscal event so close to an election, today’s Autumn Statement was never expected to be about giveaways and grand schemes. Indeed, the politics in the Commons took a back-seat to the economic musings of the OBR. The two key questions we wanted answered? First, how would the outlook for public finances – … Continued READ MORE
