Jeremy Hunt’s Budget will leave people suffering “continuing pain” over the next year, experts have said.
In its analysis of the chancellor’s announcements, the Institute for Fiscal Studies (IFS) said while inflation may be coming down, prices remain much higher than two years ago.
“What households are going to feel over the next year will be continuing pain,” the respected independent think-tank said. “Earnings haven’t caught up.”
The IFS added the Office for Budget Responsibility (OBR) - the official fiscal watchdog - had concluded these will be “the worst two years on record for household incomes”.
Paul Johnson, the director of the IFS, also said money “will have to be found from somewhere” to give pay rises to public sector workers.
“You can’t keep cutting the pay of teachers, nurses and civil servants, both in real terms and relative to the private sector, without consequences for recruitment, retention and service delivery,” he said.
Hunt said his Budget was designed to stimulate growth in the economy by encouraging more people back into work.
But he has faced a backlash over a decision to grant a tax break to the wealthiest by scrapping the cap on how much people can put into their pensions.
And the IFS said the policy “won’t play a big part, if any” in increasing the number of people in work.