Budgets & fiscal events· Economy and public finances· Tax Happy new tax year? National Insurance and Income Tax changes in 2022 3 April 2022 by Adam Corlett The start of the new tax year brings with it one of Rishi Sunak’s major tax reforms: the rise in National Insurance, announced last September and linked to additional support for the NHS and social care. This spotlight explores what this rate rise – together with freezes in the Income Tax personal allowance, the newly-announced … Continued READ MORE
Living standards· Incomes· Prices & consumption· Inequality & poverty Stressed out April brings an acute squeeze on UK living standards as higher energy bills lead to widespread fuel stress 1 April 2022 by Adam Corlett and Jonathan Marshall April 2022 will see the UK’s cost of living crisis intensify as energy prices jump by more than half overnight, pushing 5 million English households into fuel stress, even accounting for support measures recently announced by the Chancellor. This is not the end, though. Against a backdrop of the highest inflation rate in 40 years … Continued READ MORE
Budgets & fiscal events· Public spending· Economy and public finances Inflation Nation Putting Spring Statement 2022 in context 24 March 2022 by Torsten Bell and Mike Brewer and Adam Corlett and Sophie Hale and Karl Handscomb and Lindsay Judge and Jack Leslie and Jonathan Marshall and Louise Murphy and Krishan Shah and James Smith and Hannah Slaughter and Greg Thwaites This briefing note provides an assessment of the measures announced in the March 2022 Spring Statement. The Chancellor approached this with the highest inflation in 40 years and the worst income squeeze on record lying ahead of us. Against that backdrop, and with plenty of fiscal ammunition (thanks to the Office for Budget Responsibility’s (OBR’s) … Continued READ MORE
Budgets & fiscal events· Economy and public finances· Tax Softening the blow Looking ahead to Spring Statement 2022 21 March 2022 by Adam Corlett and Torsten Bell Faced with the highest inflation in at least three decades, the upcoming Spring Statement is bound to provide more support for households. But the precise set of choices – which could include support via Fuel Duty, benefits or National Insurance – will play an important role in determining the force of the cost of living … Continued READ MORE
Budgets & fiscal events· Public spending· Economy and public finances Catch 2022 Spring Statement 2022 preview 14 March 2022 by Adam Corlett and Karl Handscomb and Jack Leslie and Jonathan Marshall and Felicia Odamtten and James Smith Ahead of the 2022 Spring Statement, we preview the economic and fiscal outlook and discuss the key decisions that the Chancellor will face. The Chancellor comes into the Spring Statement with good news since the Autumn. The strongest peacetime growth in a century means the economy is around half a per cent larger, and around … Continued READ MORE
Living standards The Living Standards Outlook 2022 8 March 2022 by Adam Corlett and Lalitha Try Our fourth Living Standards Outlook explores the prospects for household incomes over both the near-term, as rising inflation causes a cost of living crisis, and the longer-term, based on the latest economic forecasts. READ MORE
Monetary policy· Macroeconomic policy Macroeconomic Policy Outlook: Q1 2022 4 March 2022 by James Smith 2022 is shaping up to be difficult year for policy makers at the Bank of England. While the fastest recovery from a recession since the war is clearly good news, its unbalanced nature at home and abroad has led to a surprising and precipitous rise in inflation. The rise in inflation reflects a mismatch between … Continued READ MORE
Economy 2030 Shrinking footprints The impacts of the net zero transition on households and consumption 1 March 2022 by Adam Corlett and Jonathan Marshall The 2020s are set to bring a step change in climate policy, with efforts to decarbonise the UK economy beginning to impact on household consumption to a greater extent than before. Different households will be exposed to these changes in different ways, but they will come in two flavours: upfront investment now to deliver savings … Continued READ MORE
Economy 2030 Under new management How immigration policy change will, and won’t, affect the UK’s path to becoming a high-wage, high-productivity economy 17 February 2022 by Kathleen Henehan Immigration has been billed as both a driver of, and a cure for, a low-wage, low-productivity economy. With big economic changes like Brexit, the recovery from Covid-19 and the transition to net zero emissions coming down the track in the 2020s, this note looks at recent changes in the UK’s immigration system in order to … Continued READ MORE
Economy 2030 Under pressure Managing fiscal pressures in the 2020s 10 February 2022 by Krishan Shah and James Smith and Daniel Tomlinson The 2020s are set to be a decade in which the spending pressures from ageing intensify, healthcare costs continue to rise, and the state needs to invest more to drive a rapid transition to net zero. These trends will play out against the backdrop of a decade of significant economic change that will place further … Continued READ MORE
Prices & consumption· Public spending· Inequality & poverty· Economy and public finances The price is right? The April 2022 energy price rise and the Government’s response 4 February 2022 by Adam Corlett and Karl Handscomb and Lindsay Judge and James Smith The Government has opted for universalism and minimising the hit to the public purse in its response to the energy price rise yesterday. The announced measures take the sting out of Ofgem’s £693 rise in the energy price cap in April with a broad-based package of support. All households will get a £200 discount on … Continued READ MORE
Wealth & assets· Intergenerational Centre Intergenerational rapport fair? Intergenerational wealth transfers and the effect on UK families 3 February 2022 by Jack Leslie and Krishan Shah Intergenerational wealth transfers – both gifts and inheritances – have increasingly become a major feature of UK economic life. These wealth transfers have major impacts on how people live their lives and the opportunities available to them. READ MORE
Covid-19· Labour market· Skills· Intergenerational Centre Leaving lockdown Young people’s employment in 2021: improvements and challenges in the second year of the Covid-19 pandemic 31 January 2022 by Louise Murphy This spotlight explores younger people’s employment trajectory during the Covid-19 pandemic, before setting out where policy makers should now be focused. READ MORE
Economy 2030 A presage to India Assessing the UK’s new Indo-Pacific trade focus 26 January 2022 by Sophie Hale The Government’s trade policy is pivoting to target the fast-growing Indo-Pacific region. The key part of this strategy is a new deal with India. This briefing note explores the implications of this approach finding that it’s something of a gamble with potential rewards coming with big risks. READ MORE
Economy 2030· Welfare Social Insecurity Assessing trends in social security to prepare for the decade of change ahead 19 January 2022 by Mike Brewer and Karl Handscomb and Gavin Kelly and James Smith and Lalitha Try The UK is facing a decade of unprecedented economic change as we adjust to a post-Covid-19 economy, a new economic context outside the European Union (EU), and the decarbonisation of the economy. And the social security system has a key role to play in the years ahead: it is part of the policy toolkit for … Continued READ MORE
Living standards· Prices & consumption Higher and higher Averting a looming energy bill crisis 17 January 2022 by Adam Corlett and Lindsay Judge and Jonathan Marshall The higher energy price cap due to be introduced on April 1 will see energy costs jump by more than 50 per cent overnight. As a result, the share of English households experiencing ‘fuel stress’ (i.e. spending more than 10 per cent of their household budget on energy) will triple from 9 per cent to … Continued READ MORE
Pensions & savings· Wealth & assets Wealth on the eve of a crisis Exploring the UK’s pre-pandemic wealth distribution 7 January 2022 by Krishan Shah Today’s release of data from the Wealth and Assets Survey (WAS) gives us a key insight into the financial position of families on the eve of the pandemic. It shows a picture of steady increases in aggregate wealth with households’ net worth standing at £15.2 trillion before the onset of Covid-19. Much is written about … Continued READ MORE
Economy 2030 Changing jobs? Change in the UK labour market and the role of worker mobility 6 January 2022 by Nye Cominetti and Rui Costa and Andrew Eyles and Tzvetan Moev and Guglielmo Ventura This report is about the nature and speed of change in the UK’s labour market, about how past periods of rapid change have happened, and about workers’ experiences as they have lived through these changes. It is written with an eye to the upheaval we expect to see in the coming decade as the effects … Continued READ MORE
Labour Market Outlook· Labour market Labour Market Outlook Q4 2021 Wages and the cost of living in 2022 29 December 2021 by Torsten Bell and Adam Corlett and Jonathan Marshall and Hannah Slaughter The final three months of 2021 have been a mixed bag for the pandemic and the labour market. At the end of September, the Coronavirus Job Retention Scheme (JRS) came to an end after 18 months – and the feared rise in unemployment does not seem to have come to pass. But the emergence of … Continued READ MORE
Covid-19· Economy 2030 Social mobility in the time of Covid Assessing the social mobility implications of Covid-19 26 December 2021 by Andrew Eyles Covid-19 has had a profound impact on the economic prospects of young people. This briefing note, which forms part of the Economy 2030 Inquiry, documents the unequal impact of economic shocks on the young and assesses what these mean for social mobility. Labour market conditions at the onset of one’s career have persistent effects over … Continued READ MORE
Housing Housing Outlook Q4 2021 The impact of higher inflation on social renters’ housing costs 22 December 2021 by Lindsay Judge and Felicia Odamtten and Krishan Shah Welcome to the final Housing Outlook of 2021.1 Times are tough for many at present, as prices rise and Omicron puts the UK’s tentative economic recovery in jeopardy. In this quarter’s spotlight we assess the living standards prospects of social renters, and in particular consider what soaring inflation means for their housing costs as they … Continued READ MORE
Economy 2030 More trade from a land down under The significance of trade agreements with Australia and New Zealand 20 December 2021 by Sophie Hale and James Smith Last week’s announcement of a trade agreement with Australia (along with a soon-to-be-finalised deal with New Zealand) is good news for the Government’s post-Brexit trade strategy. The deal with Australia represents the first substantively new deal, providing evidence of the opportunities the UK now has after leaving the EU. But both deals are small in … Continued READ MORE
Monetary policy· Macroeconomic policy What goes down must come up The Bank of England becomes the first major central bank to raise rates but impact will be small with fiscal policy key to Omicron response 16 December 2021 by Jack Leslie and James Smith The Bank of England performed a ‘bait and switch’ by not raising rates in November when many people expected they would, but then raising them today when many thought the rise of Omicron would mean that they would wait to see the impact of the new wave. Many commentators have focussed on the high current … Continued READ MORE
Covid-19· Labour market The new wave The economic policy response to Omicron 15 December 2021 by Torsten Bell and Jack Leslie A new wave of this pandemic is underway, even if we can’t see much sign of it yet in the UK-wide data. The Prime Minister rightly tells us to expect “a tidal wave of Omicron coming” and in London it’s already arrived. This is not the Christmas present any of us wanted. In terms of … Continued READ MORE
Wealth & assets Home county Options for taxing main residence capital gains 9 December 2021 by Adam Corlett and Jack Leslie Over the past 30 years, the total value of household wealth in the UK has risen from three times national income to well over seven times. Inflation-beating house price growth and high ownership rates have combined to add around £3 trillion of housing wealth from main residences to that total – accounting for around a … Continued READ MORE
