Resolution Foundation analysis of the 2012 Autumn Statement

7th December 2012

Matthew Whittaker

In our initial response to the Autumn Statement, we focused on the historic decision to remove the link between working-age benefits and prices and to instead raise a majority of working-age benefits and tax credits by just 1 per cent a year for three years from 2013, pointing out that 60 per cent of the £3.7 billion cut would fall on in-work households.  

In this note we look in more detail at the distributional impact of this welfare cut, in combination with the decision to increase the personal tax allowance by a further £235 in April 2013 and the announcement that the higher rate threshold would increase by 1 per cent a year from April 2014. Having considered this latest ‘fiscal squeeze’, we turn to consider what the OBR’s updated projections for earnings and inflation mean for the ‘wage squeeze’. Finally, we consider the longer-term consequences of these two effects for a series of stylised families.


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Resolution Foundation Autumn Statement 2012 Analysis

7 December 2012
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