Austerity doesn’t just damage public services, it destroys faith in the future

Britain can’t afford the tax cuts announced in the budget

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As the dust settles on the budget, it’s time to reflect on the real task facing anyone trying to govern Britain. The tax cuts announced are paid for with big spending cuts to come: unprotected departments (like councils and prisons) face 13% (£19bn) cuts by 2028-29. Most people think delivering them is impossible, because they’ve seen the … Continued

Cutting back on the investment and delivery of public services is not what the economy needs – or what the electorate wants

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The Government’s current plans for post-election cuts to public spending look undeliverable given rising prices and increasing demand on services. As discussed below, plans to cap day-to-day spending increases at 1 per cent (after allowing for inflation) imply very big cuts to departments not covered by existing spending commitments. This is particularly worrying given pre-existing … Continued

What Britain should learn from Biden’s Inflation Reduction Act plan

Like or loath the ‘protectionist’ Inflation Reduction Act’s green subsidies, America offers an example of strategic thinking

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The UK has lost the habit of thinking strategically. Grappling with the constraints imposed by the global and domestic economies — or reality as it is sometimes known — is deeply out of fashion these days. Debates on how the UK might respond to Joe Biden’s Inflation Reduction Act and its near $400bn of green … Continued

This Budget will leave the poorest households hundreds of pounds a year worse off

Families across Britain should expect a bumpy ride over the next six months

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Having spent the first 18 months in the job delivering Covid crisis fiscal statements, you can understand why there was a celebratory vibe to the Chancellor’s first “post-crisis” Budget today. The Government’s official economic watchdog, the OBR, came to the party laden with gifts – including a major upgrade to economic growth and a £141 … Continued

Fiscal multi-tasking

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Multi-tasking can be hard. Ask any parent that survived lockdown by combining work with something resembling home schooling. But it’s also a fact of life, so the trick is to manage multiple objectives well, not wish them away. This is true for people and our Government. Indeed, fiscal multi-tasking is what the 2020s are all … Continued

Sunak’s crisis-fighting measures: time to scale up?

The Chancellor’s policy announcements are generating wide discussion but are the sums commensurate with the depth of the downturn?

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This week the Chancellor Rishi Sunak unveiled his “Summer Economic Update.” In case it’s not clear, this wasn’t technically a Budget. That said, it still contained more policy than all but three of the fiscal events we’ve had since the onset of the financial crisis more than a decade ago. So, it was a big … Continued

Living standards
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Incomes
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Labour market
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Pay
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Inequality & poverty
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Cities and regions
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Political parties and elections

Election 2019: how Britain’s North-South divide is changing

Closing the divide once and for all is a challenge all political parties say they want to embrace

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The North-South divide is a theme often used by – and against – politicians to highlight inequality in the UK, and election time is no exception. But this divide has evolved over time, and is by no means the only geographical divide in the country.   The big economic divide Productivity – or how efficiently … Continued

Skills
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Political parties and elections

Apprenticeships and adult education: how do the major parties compare?

Latest Department for Education figures show the problems that need addressing

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While big rows over Brexit and the size of state we want have tended to dominate the news cycle over recent weeks, the 2019 general election campaign hasn’t been entirely devoid of skills policy. In fact, the Liberal Democrat, Labour and Conservative Party manifestos all include bold – albeit thinly detailed – proposals on apprenticeships … Continued

Fiscal policy
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Economy and public finances
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Macroeconomic policy
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Political parties and elections

Political leaders must set out credible plans to tackle the next downturn

The time for action on macroeconomic policy is now

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Okay, fair enough, there’s a lot going on right now. With a fraught election campaign in full flow, and our future relationship with the EU still up in the air, you can be forgiven for taking your eye off preparations for the next recession. But boom and bust hasn’t gone away. So while the sun … Continued

Low pay
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Pay
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Wealth & assets
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Political parties and elections

Question Time’s £80K man was wrong about the top 5%. But the super-rich are on another planet

Those in his earning bracket have far more in common with workers on average pay than they do with the 1%

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f you live in Bolton and earn more than £80,000, you’re rich compared with your neighbours. Really rich. The average pay for all workers is just £22,000 and one in four earns less than £15,000. And yes, you’re still rich among the country as a whole: only 5% of earners make more than £80,000 – … Continued

Demographics
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Political parties and elections

The middle aged, not the middle class, are the new swing voters

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An election is coming. You may have noticed. The early phase of any campaign is the contest about what the election will actually be about – where the battle lines will lie. You want it to be all about Brexit if you’re gunning for the Conservatives or Liberal Democrats, and everything but Brexit if you’re … Continued

Richard Hughes

Another summer blockbuster (on fiscal risks) from the OBR

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Today the OBR published its second Fiscal Risks Report, a comprehensive assessment of all the things that could go wrong with the UK’s public finances over the next 50 years. And it is a summer blockbuster – topping out at 293 pages in total. Fiscal risk analysis is the new cutting edge in fiscal policymaking, … Continued

Demographics
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Intergenerational Centre
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Political parties and elections

My Generation, Baby: The Politics of Age in Brexit Britain

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Generational politics is nothing new, but the extent of the profound generational cleavage that has emerged in British electoral politics is novel. The Brexit vote and the 2017 general election put generational politics centre‐stage, eclipsing in some ways the traditionally dominant role of class. Our two main parties now rely on age‐based coalitions of support—on … Continued

Phil ‘Bullseye’ Hammond told MPs what they ‘could’ve won’ – if only they didn’t stuff up Brexit

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Last night Parliamentarians went all Noel Edmonds as they debated deal or no deal. But earlier in the day it was the late, great Jim Bowen of Bullseye fame that the Chancellor was channelling in his Spring Statement, setting out just what MP’s “could’ve won” – or might still win – if they back a … Continued

Is rising inequality helping to swell the coffers for Fortunate Phil?

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Fortunate Phil is not what the Chancellor generally gets called. But as he prepares for tomorrow’s Spring Statement, Philip Hammond – despite facing what looks like headline bad news – has at least some reasons to be grateful for good luck on both the economic and political fronts. The Treasury is gearing up for the … Continued

As growth slows UK households have already taken a £1,500 living standards hit since the referendum

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Today we learnt that economic growth slowed significantly at the end of 2018, with GDP only growing by 0.2 per cent in the last three months of the year. This is around a third of the pre-crisis average rate. In December alone, the economy contracted by 0.4 per cent with the manufacturing sector now having … Continued

Matthew Whittaker

Hitting the books: student loans and the public finances

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With everything that’s going on in British politics right now, it’s easy to forget that the government was celebrating some seriously good news just seven weeks ago. You might remember that the Chancellor got handed a £74 billion fiscal windfall at the Budget that allowed him to deliver the long-promised extra spending on the NHS … Continued

Pessimism, Politics and Economics: the real Budget story

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Debates following this week’s Budget have been dominated by political arguments about whether the Chancellor’s spending splurge means that austerity had been ended or lives on (our view: austerity was significantly eased but not ended). But another debate has been conspicuously absent this week, having dominated the UK’s political economy for the past eight years: … Continued

The Budget marks a very significant easing – but not an end of austerity

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Marriages require compromise. So we shouldn’t be surprised that the reluctant political marriage between Theresa May and Phillip Hammond has delivered a compromise Budget. Caught between the Prime Ministers promise to “end austerity”, the wish to see debt falling, and the reality of the parliamentary arithmetic making significant tax rises difficult the Chancellor has taken … Continued

The Chancellor may have one arm tied behind his back, but there are still tax levers he can pull

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How can a government with a tenuous majority, an intra-party feud and Brexit uncertainty find the money to ‘end austerity’ on top of more than £20 billion a year it has promised for the NHS? The safe bet is that it won’t find anywhere near all of it in the Budget. This can – like … Continued

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