IPPR: Squeezing living standards is wrong

IPPR director Nick Pearce comments on the autumn statement 2011:

“This mini-Budget does not address the main problem facing UK economy in the short-term: the shortage of aggregate demand. Many of the Chancellor’s collection of small measures are welcome but it is wrong to squeeze the living standards of lower and middle income families relying on tax credits in order to pay for lower increases in fuel duty.

“What we now know was that the bubble, when it burst, was bigger than we realised. As a result, the Chancellor has had to spread the pain out longer. But the faltering recovery has not helped and the cumulative effect of growth downgrades on unemployment in 2013 show just how bad things are. Last June it was forecast to be 6.8%, in March was 7.6% and now 8.6%. Before the recession began, unemployment was just 5.2%. This is the true cost of a lack of demand in the economy.”