Pay A reality check on hopes that Britain’s pay squeeze has ended 19 November 2014 by Matthew Whittaker Last week’s data on average weekly earnings (AWE) showed that annual pay growth in September had overtaken CPI inflation for the first time since 2009, sparking cautious (and not-so-cautious) proclamations that the six-year squeeze on earnings might finally have come to an end. Today comes a sobering reality check. According to the ONS’ Annual Survey … Continued READ MORE
Budgets & fiscal events· Public spending· Economy and public finances· Political parties and elections In the balance: public finances in the next parliament 2 October 2014 by Matthew Whittaker and Adam Corlett Having assured us in recent weeks that we are better together, we can expect the three main parties to provide somewhat more discordant visions of the future over the coming conference season. And, with the Coalition expected to have delivered just over half of its intended fiscal consolidation programme by the end of the current … Continued READ MORE
Pay Raising the floor: scenarios for the minimum wage in the next parliament 28 September 2014 by Matthew Whittaker The National Minimum Wage (NMW) for those aged 21 and over – the ‘adult rate’ – is increasing to £6.50 from 1 October 2014. The 19p increase represents the first real-terms rise in the NMW in six years, but will leave the rate some 4.1 per cent lower in real-terms than its peak in October … Continued READ MORE
Public spending· Economy and public finances Crisis and consolidation in the public finances – reflections on our seminar with the OBR 9 September 2014 by Matthew Whittaker An exciting morning at RF-HQ. In one room, the first of our Universal Credit expert panel meetings, starting the process of reviewing the current design of UC and thinking about changes that would make the policy more likely to support people to get into and progress in work. In another, the OBR arrived to launch … Continued READ MORE
Household debt· Macroeconomic policy To avoid squeezed households struggling, we must beware of premature interest rate rises 6 August 2014 by Matthew Whittaker Thursday’s interest rate announcement from the Monetary Policy Committee is unlikely to generate many headlines. “Bank does nothing for 65th straight month” is hardly a circulation-booster, even during silly season. But we can expect plenty of speculation alongside the announcement that the consensus among MPC members on holding rates will have been broken for the first time since … Continued READ MORE
Living standards Living standards: what happens next? 15 July 2014 by Matthew Whittaker Going into next year’s election – the ‘living standards election’ – party political strategists are likely to fret about the length of voters’ memories. When asked whether the government has made them better off, will they compare their position with last year or with five years ago? The depth of the decline in incomes associated … Continued READ MORE
Household debt The Bank’s conundrum countdown – Tightening policy in the shadow of a debt overhang 17 June 2014 by Matthew Whittaker If Mary Poppins taught us anything, it’s that a British bank is run with precision. But against a backdrop of rapidly changing and sometimes conflicting economic data, the balancing act currently facing the Bank of England requires a level of calibration rarely before seen. Clearly monetary policy must be tightened over the coming months and … Continued READ MORE
Household debt· Wealth & assets We need to solve the mortgage problem before interest rates rise 23 May 2014 by Matthew Whittaker The question of when interest rates should begin to rise has been much-discussed in recent weeks, and after five years of sitting at the rock-bottom level of 0.5 per cent, a gradual increase is expected from next year onwards. This has implications for the UK’s 8.4 million mortgagors, one in ten of whom risk being … Continued READ MORE
Household debt· Wealth & assets· Housing The end of a ‘golden era’ for mortgages 23 May 2014 by Matthew Whittaker It’s been a busy week in the world of monetary policy. On Sunday, Mark Carney said that rising house prices pose the biggest threat to economic recovery. On Tuesday, the official statistics told us what we already knew – that house prices in London are soaring, by 17 per cent year-on-year. Some homeowners are finding … Continued READ MORE
Household debt· Wealth & assets· Housing The ‘mortgage prisoners’ with no escape route 22 May 2014 by Matthew Whittaker Mark Carney, the governor of the Bank of England, has made headlines after expressing concerns about the dangers of another “big debt overhang” building up as house prices continue to rise and approvals for large mortgages increase. He is right to be concerned, and his intervention is a further reminder of how we need to … Continued READ MORE
Pay Turning the corner: understanding this week’s wage data 14 April 2014 by Matthew Whittaker After nearly six years in which wage growth has been consistently outstripped by inflation, expectation is building that this week will mark an official end to the pay squeeze. As the chart below shows, the gap between the Office for National Statistics’ Average Weekly Earnings (AWE) and Consumer Price Index (CPI) inflation measures has been narrowing … Continued READ MORE
Labour market Pay set is to go up, or down, or stay the same – it all depends on how you measure it 3 April 2014 by Gavin Kelly and Matthew Whittaker We can expect to hear an awful lot about the closing gap between pay and inflation over the next few months as, inevitably and thankfully, on some measure we close in on a “cross-over point” where wages overtake price rises. But this poses the question: which measure of inflation and, indeed, which measure of pay? … Continued READ MORE
Economy and public finances A budget for the ‘makers, doers and savers’ 20 March 2014 by Matthew Whittaker The theme of economic optimism that built during 2013 spilled over into today’s Budget—but only just. GDP is projected to rise more quickly over the next four years than was the case back in the autumn, and employment continues to out-perform expectations. But there are question marks over the extent to which people are feeling … Continued READ MORE
Labour market The Budget contains little to excite those on middle incomes 19 March 2014 by Matthew Whittaker Despite the talk of letting people keep more of what they earn and what they save, today’s budget contained little to excite those on low to middle incomes. The government’s policy of increasing the income tax personal allowance above inflation has consistently been sold as a low-earner tax cut. But in reality, today’s announcement of … Continued READ MORE
Labour market Without sustained improvement in wages, the recovery may yet run out of road 19 February 2014 by Matthew Whittaker While the latest set of labour market statistics which came out this morning suggested a slowdown in the rate of improvement, they don’t disguise what continues to be a very strong period for UK employment. The number of people in work passed its pre-recession peak of 29.6 million in the summer of 2012; since then … Continued READ MORE
Housing Crisis averted, or delayed reaction? 27 November 2013 by Matthew Whittaker As the weather gets colder, so Britain’s economic recovery appears to be warming up. The sense of optimism engendered by positive GDP and employment figures and by a range of business surveys is likely to be reinforced at next week’s Autumn Statement with significant upgrades to the OBR’s growth projections for the coming years. Clearly … Continued READ MORE
Labour market Why the Bank of England should target wages as well as unemployment 6 November 2013 by Matthew Whittaker After months of relative inaction, MPC meetings are about to get very interesting again. While rate increases should be some way off yet, improvements in a range of economic indicators mean that ever more attention is set to shift towards the question of how and when monetary policy tightens. While calls for action are likely … Continued READ MORE
Welfare Who will benefit from the tax break for married couples? 21 October 2013 by Donald Hirsch and Matthew Whittaker Universal Credit means that married couples with children will only receive a small proportion of the gains David Cameron’s announcement of a marriage tax allowance has attracted significant interest. The policy will make £1,000 of personal income tax allowance transferable between adults who are married or in a civil partnership, provided the higher earner is … Continued READ MORE
Welfare How to ensure a rise in the personal allowance delivers on its promise 17 October 2013 by Matthew Whittaker Income tax cuts, or the promise of them, seem likely to play a big part at the next election. Having delivered on what was initially a Liberal Democrat policy to raise the personal tax allowance to £10,000, both sides of the coalition appear keen on further increases after 2015. For its part, Labour says it … Continued READ MORE
Living standards Plugging the gap 2 October 2013 by Matthew Whittaker Have lower rates helped to plug the income/expenditure gap? The latest Economic Review from the ONS provides the usual useful compilation of recent economic outputs, reinforcing the sense of momentum underpinning recovery, but questioning just how balanced this new growth is. One of the most important imbalances it picks up is between consumption and investment. Although still … Continued READ MORE
Labour market Low Pay Britain: Failure to act risks generating growth which once again disproportionately benefits a minority 17 September 2013 by Matthew Whittaker Tentative it may be, but the British economy finally appears to be entering recovery. Output is improving, the employment rate is climbing and, perhaps most importantly for the sustainability of the upturn, a range of surveys point to a return of business confidence. Welcome though this is, there are still big question marks over the … Continued READ MORE
Housing Number of families with perilous levels of debt repayments could more than double to 1.2 million 11 July 2013 by Matthew Whittaker width=”597″ height=”486″ frameborder=”0″ marginwidth=”0″ marginheight=”0″ scrolling=”no” allowfullscreen=”allowfullscreen”> Closer to the Edge? Prospects for household debt repayments as interest rates rise from ResolutionFoundation For more information see Closer to the Edge? Prospects for household debt repayments as interest rates rise READ MORE
Living standards Austerity after 2015: why the worst is yet to come 20 June 2013 by Matthew Whittaker With a week to go before the Spending Review, reports suggest that the Treasury has secured just a third of the £11.5bn of cuts planned in 2015-16. Yet amid the claim and counter-claim about how far departmental budgets can be squeezed, it is worth reflecting on how the review fits into the broader context of deficit reduction. … Continued READ MORE
Living standards A working solution? The continued rise of in-work poverty 13 June 2013 by Matthew Whittaker The latest edition of the DWP’s Households Below Average Income series released today shows that child poverty (i.e. those living in households with incomes less than two-thirds of the median) continued its downward trend in 2011-12. Having peaked at about 29% in 1992, the proportion of children living in poverty has since fallen steadily, reaching 17% in … Continued READ MORE
Housing The ticking debt bomb? 2 May 2013 by Matthew Whittaker This blog originally appeared on Public Finance When the financial crisis first hit, politicians of all parties talked up the notion of ‘rebalancing’ the economy, moving away from a growth model dependent on financial services, house price increases and consumption and towards one based on the real economy and on trade. Five years on and, with … Continued READ MORE