The framing for the #QueensSpeech is an agenda "to grow and strengthen the economy and help ease the cost of living for families." That's the right focus, and here's a thread explaining the scale of the challenge. Whether these Bills actually fit that focus is another question...
First, we clearly need stronger economic growth. Over the past decade, the economic performance of advanced economies has been poor, and particularly so for the UK. We are falling further behind the US, France and Germany....
Second, the economic stagnation we've experienced has led to a lack of real wage growth. By the end of this parliament, average earnings are forecast to be just £2 a week higher than they were before the financial crisis.
Third, this all amounts to a terrible parliament for living standards (as measured by real household disposable incomes). The worst parliament on record in fact. This has to be turned around...
To do that, the UK needs a new economic strategy that deals with the economic challenges of the 2020s (ie net zero) as well as ongoing economic challenges (ie stagnation). At present the Government - or indeed of the major political parties - lacks that overall economic strategy.
What a new economic strategy for the 2020s should look like is the key task of our ongoing Economy2030 Inquiry with @CEP_LSE & funded by @NuffieldFound . Report #18 of the Inquiry coming out tomorrow, with lots more to come... economy2030.resolutionfoundation.org
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Starting now - Taking the right path: Where does monetary policy go in a low rate, high inflation, unstable economic environment? With MPC Member Michael Saunders, Petra Geraats & @r_shanbhogue Watch it on our YouTube channel here resolutionfoundation.org/events/taking-…
@r_shanbhogue Speaking at our event, Michael Saunders highlights the importance of disentangling domestic vs externally driven inflationary pressures. Not straightforward but, as Fig 2 in his speech shows, its rising everywhere.... bankofengland.co.uk/speech/2022/ma…
@r_shanbhogue Key point from Michael Saunders - the UK economy’s potential output has fallen well below its previous pre-pandemic trend. A key factor is a smaller workforce - lower inward migration and more people economically inactive due to long-term ill-health
This month’s labour market stats showed the pay squeeze deepening, despite unemployment equalling its lowest level in half a century. Thread and key charts to follow:
On employment, the good news is that the labour market continues to tighten. Unemployment reached 3.8% in the three months to February, matching a 50 year low. As ever, this underlines the extraordinary success of the furlough scheme.
Vacancies remained high (the ONS 3-month vacancy series is at a record level, while online vacancies are above 2019 levels but below peak). Overall, conditions in the labour market are ‘tight’.
Despite fears that the pandemic would cause lasting unemployment, the labour market is tight on all measures, with low unemployment, high vacancies and record-high job moves.
This is part of what’s driving fast nominal wage growth, as employers raise wages in order to attract and retain workers. In the year to January 2022, nominal pay grew by 4.1 per cent, compared to an average of 2 per cent in the decade prior to the pandemic.
The Government’s British Energy Security Strategy makes important progress towards achieving net zero - but does little to help the many households facing unaffordable bills in the short term - new analysis published today: resolutionfoundation.org/publications/l…
The strategy confirms concerns that the Government will lean on energy bills to fund new infrastructure, rather than general taxation. As the chart below shows, utilising Exchequer funds would be more equitable, with richer households footing a greater share of the bill.
The focus on supply also overlooks the urgent need to help lower-income households reduce energy demand. Soaring energy prices have thrown the UK's poor record on insulating homes into sharp relief - with this issue particularly acute for poorer households in London.
The Government’s British Energy Security Strategy was charged with reducing national exposure to imported hydrocarbons and bringing down energy bills for already-stretched households - but how did it do? 🧵 resolutionfoundation.org/publications/l…
The strategy saw high ambition on nuclear and offshore wind but minimal progress on lower cost onshore wind and solar. Overall, however, he efforts announced efforts – culminating in a 95% decarbonised electricity system by 2030 – would be a big very welcome step toward net zero.
From a living standards point of view, however, hings are less rosy. While the Government’s supply-side interventions will likely feed through to lower energy costs in late 2020s, they do little to help the many households facing unaffordable bills in the short term.
1. Support for households in the face of the cost of living crisis.
2. Set up the tax cuts to come.
Did he deliver?
@JamesSmithRF The key economic context is the @OBR_UK forecasting the highest inflation for 40 years this year....
@JamesSmithRF@OBR_UK The Chancellor's policy response centred around a 5p fuel duty cut, a big increase in the NICs threshold and £500 million increase to the Household Support Fund (plus energy bills rebate package announced earlier). Notably nothing to address the £11bn real-terms cuts to benefits.