12/09/2011

UK Household Budgets Face Further Squeeze

The Institute for Fiscal Studies (IFS) has warned that household budgets could be squeezed for the next 10 years as the impact of tax rises and cuts is felt.

Its recent survey suggests families have seen the biggest fall in living standards in 30 years in the last financial year and warned that those on lowest incomes were likely to suffer a further significant reduction in their spending power.

The Treasury said plans to cut the deficit had maintained low interest rates and helped struggling families.

The IFS study also found that UK households, particularly those in the bottom half of the income distribution, had been relatively protected from the immediate impacts of the recession, partly because of state welfare systems and financial support.

But it said earnings, state benefits and tax credits had all fallen in real terms in the UK over the past year and that the pain of the recession had been delayed rather than avoided.

Research economist at IFS Robert Joyce, said: "The current economic downturn began more than three years ago, and may seem like old news.

"But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come."

Previous IFS research has shown that the decline in average living standards looks set to continue until at least 2013-14.

The government has been called upon to be ready to adapt given the current economic climate.

(JG/CD)

Related UK National News Stories
Click here for the latest headlines.

10 May 2012
77 Years For Rochdale Child Sex Gang
The nine men found guilty of operating a child sexual exploitation ring have been jailed for a total of 77 years. The trial, which ended on Tuesday, heard how the men groomed young vulnerable girls in Rochdale.
08 June 2006
Sentence increased for baby rapist
A man who raped a 12-week-old baby girl has had his minimum jail term increased from six years to eight years by the Court of Appeal.
05 January 2012
Report 'Damning Verdict' On Tax Proposal
The Labour Party has described a report on the Government's plans on tax and benefits as a "damning verdict". Labour’s Shadow Home Secretary Yvette Cooper said a report commissioned by the Family and Parenting Institute, on the prospects for poverty and income on families up to 2015, left the Government's family-friendly claims "in tatters".
08 April 2003
Disadvantaged students to be encouraged into university
Plans for a new Office for Fair Access (OFFA) have been unveiled today which it is hoped will encourage wider participation in higher education.
14 May 2012
Disability Benefits To Be Reformed
The Work and Pensions Secretary Iain Duncan Smith has said that planned changes to disability benefits will go ahead, insisting that the reform is needed. The new reforms could see half a million people losing the Disability Living Allowance over the next four years.