IPPR response to Autumn Statement 2016
IPPR Press Release - for immediate use
On the state of the economy:
Catherine Colebrook, IPPR Chief Economist, responding to today's Autumn Statement by the Chancellor, said:
“At the beginning of his speech the Chancellor made the now familiar claim that the British economy is in a strong condition. But the rest of his speech gave the lie to this.
"As he then admitted, UK investment and productivity are far below our major competitors, we have a record trade deficit, an unsustainable fiscal gap between projected tax receipts and public expenditure, and a regionally deeply unbalanced economy between London and the Southeast and the rest of the country.
"What he did not say, but was made clear during the EU referendum campaign, is how unequal the distribution of income and wealth has become. It is time that the national debate about the economy reflected these fundamental weaknesses. Tackling them will require a far more profound change to policy than the measures the Chancellor announced today.”
On the new fiscal rules:
Alfie Stirling, IPPR Senior Economic Analyst, said:
“Today’s change to the fiscal rules is better than nothing but not nearly enough. The Chancellor has simply removed from his target the extra borrowing he has to make to cover higher welfare spending and lower tax receipts, as a result of a weaker economic outlook.
“He is being reactive, not proactive. The Chancellor has missed his opportunity to set smart new fiscal rules that allow for significantly increased investment spending that could raise economic productivity over the long term.“
On the increase in the National Living Wage and change to Universal Credit:
Alfie Stirling said:
“The Chancellor’s simultaneous announcement of a rise in the minimum wage and change to Universal Credit is pure sleight of hand. Even with these changes, the Government is still cutting Universal Credit by more than £2 billion. So almost every penny of the rise in the national minimum wage will be taken away again from those who need it most. Many minimum wage earners will actually be worse off.”
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1. IPPR’s report ‘Out of Shape: Taking the Pulse of the UK Economy’ sets out six major problems of the UK economy. These problems are symptoms of deeper structural weaknesses which can no longer be solved by tinkering at the edges of existing economic policies. They show why the Commission on Economic Justice is needed:
- The investment problem: we invest substantially less than other developed countries, and investment as a proportion of GDP is declining;
- The trade problem: we import far more by value than we export, and this too has been deteriorating
- The fiscal problem: the government’s revenue-raising capacity is lower than its spending obligations, and this trend will worse as our population ages;
- The income problem: the gains from economic growth flow mostly to a small minority of the very richest in UK society, while those on lower incomes have seen their incomes stagnate;
- The regional problem: London and the South East perform significantly better than the rest of the UK in terms of income and productivity, leading to growing regional inequalities;
- The carbon problem: we are failing to reduce emissions in line with our statutory carbon targets.
2. Last week the IPPR Commission on Economic Justice was launched, which aims to rewrite rules for the post-Brexit economy. It is a major two-year programme will examine the challenges facing the economy and make practical recommendations for its reform. The Commissioners include the Archbishop of Canterbury, TUC General Secretary, Chairman of John Lewis, CEO of Siemens UK, and many other leading figures.
3. IPPR aims to influence policy in the present and reinvent progressive politics in the future, and is dedicated to the better country that Britain can be through progressive policy and politics. With nearly 60 staff across four offices throughout the UK, IPPR is Britain’s only national think tank with a truly national presence.
Our independent research is wide ranging, it covers the economy, work, skills, transport, democracy, the environment, education, energy, migration and healthcare among many other areas. ippr.org