Huge tax cuts and a borrowing surge: The Chancellor has opted to boost short term growth and interest rates while setting the public finances on an unsustainable path – here are five key takeaways from today’s #MiniBudget – THREAD🧵
1 - £45 billion of tax cuts were announced today – going far beyond election promises to cancel corporation tax increases and reverse this year’s National Insurance rise. These are the largest tax cuts to be announced in a single fiscal event since the 1970s.
2 - A record increase in borrowing: The decision to combine the largely unavoidable higher deficit caused by rising energy prices/interest rates with permanent tax cuts will drive up borrowing by £411 billion in coming years. No Chancellor has increased borrowing by so much.
3 – Future spending could be on the cards: The Chancellor has said that debt falling remains his key metric for fiscal sustainability – but achieving that during the middle of this decade could require spending cuts of £35 billion in 2026-27.
4 – Almost two-thirds (65%) of the gains from personal tax cuts announced will go to the richest fifth of households: Almost half (45%) will go to the richest 5% alone, while just 12% of the gains will go to the poorest half of households.
5 – Caution needed on growth: While energy support will boost GDP this winter, the borrowing required will also mean higher interest rates. Growth in the years ahead is likely to be driven far more by the path of energy prices than the tax cuts announced today.
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Since 1997 earnings have doubled, while house prices have increased *4.5 times*.
Our Research Director Lindsay Judge spoke to @BBCr4today this morning about the state of British housing 🏡🧵
Our current housing crisis is decades in the making.
The UK is not alone in considering itself in the midst of a crisis, but our cramped and ageing housing offers the worst value for money of any advanced economy.
Looking at 'imputed rents' of homeowners as well as actual rents, we spend more on housing than almost every other rich country.
Back for more? - the Resolution Foundation overnight analysis of the 2024 Spring Budget is out now!
To whet your appetite ahead of reading the full report, here's a six-chart thread with a few of the key highlights....
⬇️⬇️⬇️resolutionfoundation.org/publications/b…
1) Filling out the tax sandwich.
A net tax cut of £9 billion is taking effect in the election year. But this is dwarfed by the estimated £27 billion of tax rises that came into effect last year (2023-24) and the £19 billion that are coming in after the election (2025-27).
2) Shifting state support from the rich to the poor.
RF analysis of all major tax and benefit policies announced in this parliament show finds that typical households are set to gain £420 a year on average, while the poorest fifth gain £840 and the richest fifth lose £1,500.
Kicking off our event @_louisemurphy says that Britain has a youth mental health crisis. One-in-three 18-24-year-olds report having a common mental disorder, rising two-in-five young women.
This is having real-world impacts.
On health, more than half a million 18-24-year-olds were prescribed anti-depressants in 2021-22.
And on the labour market, people in their early 20s are now more likely to be economically inactive due to ill-health than those in their early 40s. This is a big shift over the past 25 years...
The chancellor has gone for broke on pre-election giveaways. Meanwhile, households are broke, after getting £1,900 poorer over the course of this parliament.
💸 Pre-election tax-cuts today rest on implausible spending cuts tomorrow
💼Well-targeted policies to address tax system bias were welcome
✋As are steps to encourage business investment (but undercut by deeper cuts to public investment)
First up, some of the pain has been delayed.
The @OBR_UK shifted slow economic growth into the future.
The UK economy was more resilient than expected this year (growth revised ⬆️from -0.2% to 0.6%), but things look worse next year (growth revised ⬇️from 1.8% to 0.7%).
Speaking at our event, Mary Starks of @FlintGlobal highlights the centrality of moderning our power and water infrastructure for our net zero transition. Regulators will play a key role in driving these changes (and will inevitably be unpopular for doing it!)
Mary highlights a key challenge - we know we need to invest a LOT to modernise our infrastructure. But we don't know what investments will actuallly pay off. That's a key challenge for both investors and policy makers...
Another big infrastrucuture challenge - persuading investors that projects will pay off over a 30-50 year period, and won't be pushed off course by electoral cycles. This is a big task for regulators overseeing these projects, and is getting harder as the scale of need grows.
Today’s migration statistics confirm that post-Brexit migration change has been big – but some of the change is different to what many of us expected... summary 🧵 from RF's @charliejmccurdy ⬇️
The latest migration data for the year ending December 2022 showed that overall net migration rose to 606,000 – driven primarily by non-EU migration (662,000).
Among non-EU migrants, the most common reasons for coming to the UK were to study (39%) to work (25%) or for humanitarian reasons (19%). The recent rise has been driven by unique factors, such as the Ukraine war and the end of Covid-19 restrictions (more students arrived).