Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

UK economy damaged by ‘own goals’ like Brexit and Liz Truss’s Budget, economists say

Institute for Fiscal Studies says UK faces ‘long, unpleasant journey’ over next few years

Jon Stone
Policy Correspondent
Saturday 19 November 2022 08:21 GMT
Comments
Autumn Budget: Key points from chancellor's statement

Britain's economic situation has been made worse by a series of “economic own goals” by the government, a respected economic institute has said.

In his customary post-Budget briefing, the director of the Institute for Fiscal Studies said the UK faced a “long, unpleasant journey” over the next few years.

The think tank’s chief Paul Johnson warned that the drop in living standards forecast is the “biggest fall in living memory” and added: “Middle England is set for a shock”.

“This will hit everyone. But perhaps it will be those on middling sorts of incomes who feel the biggest hit.

“They won't benefit from the targeted support to those on means-tested benefits. Their wages are falling and their taxes are rising. Middle England is set for a shock,” he said.

Mr Johnson said the government was “reaping the costs of a long-term failure to grow the economy”, adding:

“The truth is we just got a lot poorer. We are in for a long, hard, unpleasant journey; a journey that has been made more arduous than it might have been by a series of economic own goals. Mr Hunt appears to have recognised this."

Mr Johnson named Brexit, cutting spending on public investment, and Liz Truss's mini-Budget as the key “own goals” inflicted by the UK government on the British economy.

“Let's start with slashing investment spending, that was something announced under the last Labour government and continued by George Osborne,” he said.

“Cutting spending on education, particularly huge cuts to vocational and further education but also to schools over that period.

“Very clearly, Brexit was an economic own goal ... economically speaking that has been very bad news indeed and continues to be bad news, particularly the way that we've done it, the hard type of Brexit we've had, distancing ourselves from the single market.

“Obviously the mini-Budget of a couple of months [ago] didn't help. In fact, that was another large own goal.”

He also pointed the finger at the “political chaos” of recent years, telling reporters: "The general economic and political instability and uncertainty that we've had over the last several years, which are associated by Brexit, and also with that mini-Budget, have definitely been a constraint on growth.

“There have been three prime ministers and four chancellors in a few months.

“And to be reversing policy here, there and everywhere, to be uncertain about your trading relationship with the rest of Europe, to have corporation tax going up, down and round and round and round, all of that is bad for growth.”

Jeremy Hunt's autumn statement included significant tax rises, such as freezing tax thresholds – as well as cuts to departmental budgets. A plan to cap social care costs was postponed by two years.

Speaking on Friday morning, the chancellor warned that “over the next two years it is going to be challenging”.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in