The Chancellor’s budget will result in a new high tax economy according to overnight analysis by the Resolution Foundation. With higher growth, inflation and public spending than previously expected, combined with tax rises already in train, the Foundation warns that Britain could be set for a flat recovery for household living standards.
In 2026-27 tax as a share of the economy will be at its highest level since 1950, amounting to a £3,000 increase per household since Boris Johnson became Prime Minister.
The think tank found policies announced by Chancellor Rishi Sunak had boosted incomes by 2.8% for the poorest fifth of households. However, households on middle incomes would take a 2% hit, it added.
Of the 4.4 million households on universal credit, about three-quarters (3.2 million households) will be worse off as a result of decisions to take away the £20-a week-uplift, despite the chancellor’s new universal credit measures.
Torsten Bell, Chief Executive of the Resolution Foundation said: “While tax revenues and NHS spending will be growing rapidly in this economy, growth in pay packets and family incomes looks far more anaemic – a huge challenge that the welcome rise in the National Living Wage and boost to Universal Credit eased, but did not overcome.”