THIS is a Budget with a few baubles for the right-wing press, but Sunak’s spring Budget is clearly an austerity Budget.
Inflation has hit 6.2% – the highest it has been for nearly 40 years – and it’s just getting started with the UK Government’s own modelling (OBR) suggesting it will hit 7.4% this year.
However, 7.4% will require a fairly rapid peace deal in Ukraine that leads to the ending of sanctions and rapid falls in the costs of oil and gas. I’ve been predicting 10% inflation this year, I see no reason to be more optimistic.
The cost-of-living crisis was in full effect due to the impact of Brexit, Covid camouflaged the worst of Brexit and added some severe short term pain, and now the Conservatives are trying to blame it all on the Ukraine invasion. Bad news upon bad news for sure but the foundations of the crises were built on the back of Brexit.
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Living standards are also set to fall faster than at any time since the mid-1950s, with the OBR saying real household disposable incomes per person would fall by 2.2% in 2022-23 as earnings from work fail to keep pace with soaring inflation. The Treasury had predicted 6% GDP growth this year, expecting a post-Covid bounce back.
However, it has now been downgraded to 3.6%. The Chancellor had to look at protecting the needs of the people but instead, he has protected corporations by rejecting windfall taxes and the wealthy by not increasing taxes on higher earners.
Again he abandons pensioners by not using this statement to reinstate and backdate the brutal real-terms cut in pensions when he scrapped the triple lock this year.
And finally “The basic income tax rate is to be cut from 20% to 19% before the end of this Westminster parliament in 2024”. Jam tomorrow and a blatant admission that he will only help when there is an election looming, one that he hopes will make him PM.
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