Hunt’s latest Budget shows the UK heading for a dismal future. According to the Office for Budget Responsibility, the UK is now facing two years with the sharpest fall in living standards since records began. The economy will contract again this year. The level of taxation is at the highest for many decades. Our growth will be below that of our peers.
And yet, many of the UK’s newspapers reported it as a minor triumph. Headlines largely reported it as an upbeat Budget which would help get Britain working again.
Is this really a future the UK should be looking forward to?
No, quite the opposite: it is a defeatist Budget which needlessly fails to tackle our problems:
- It does not address the urgent issues the country faces;
- It proposes to accept underperformance vs our peers; and
- It proposes to accept underperformance vs our history.
The Budget does not address the urgent issues the country faces
The median earner in the UK is poorer today than they were in 2008, 15 years ago – a period of mass impoverishment not seen for almost two centuries. Poverty is high and rising. Public services are failing. Investment has plummeted. And, as a result, the UK is falling far short of its environmental targets.
This Budget will not address any of these issues. The winners from the Budget will be those with large shareholdings and large pension pots, roughly the wealthiest 3% of the population. The rest will be worse off as income tax thresholds are ‘frozen’ – which means that in real terms they are set to fall so that people with lower incomes will now be paying higher taxes.
We wrote previously how these issues had been caused by an “ABC of Economic Mismanagement” – three hugely damaging policy mistakes: Austerity, Brexit and mismanagement of COVID. Hunt has added a fourth: a defeatist Declinism, which fails even to attempt a solution to the problems the country faces.
The Budget proposes to accept underperformance vs our peers
According to the OECD’s latest forecasts, the UK will have the second worst performance of all major economies this year and next – underperformed only by Russia, a country facing widespread sanctions.
Our government is normalising the idea that this performance is acceptable. Even that – as we will technically avoid a recession this year – it is somehow a victory over those who doubted their economic policies.
The Budget proposes to accept underperformance vs our history
And this kind of dismal performance is not just at odds with our peers: it is at odds with our own history. The chart below shows what has been happening to real (inflation-adjusted) weekly earnings in the UK.
In short, median earnings used to rise almost every year, so that over time most people would find themselves getting better-off. After 2010, they fell and never recovered – and they are now falling sharply again. This is mass impoverishment in action.
And our government, and much of our media, seem content with that outcome.
Conclusion
We cannot afford to continue with these ABCD policies. And we must not succumb to declinism: there is no reason why the UK should continue to adopt policies which guarantee underperformance and mass impoverishment.
As we wrote last year, it is time to change track – and very feasible to do so if we unite in demanding it:
“We should be aiming for a just, prosperous, democratic society in which everybody has the chance of a decent life. A society with secure, fairly paid jobs so that ordinary people have a reasonable expectation of being able to afford to buy themselves a flat or house. A society where people can count on being able to bring up children without fear of poverty. A society where access to healthcare is a right not a luxury. A society where the government accepts that it has responsibilities for the population as a whole and that collective action is often the only way to solve important problems (for example tackling the climate emergency or funding basic research with no immediate commercial application).
A society, above all, where each new generation has a reasonable expectation of a better life than its predecessors.”
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