Every household in the country will be £575 worse off because of weak growth in Boris Johnson’s economy even before the impact of the coronavirus is factored in, a respected think-tank has warned.
The Resolution Foundation also warned that child poverty was also set to rise in their response to Chancellor Rishi Sunak’s first budget
The foundation warned that the GDP markdown from the Office for Budget Responsibility (OBR) financial watchdog was both “incredibly grim and yet still unbelievably optimistic”.
Chancellor Rishi Sunak used his Budget to inject £30 billion in supporting the economy and softening the blow of the Covid-19 sickness ahead of the Government’s expected ramping up of measures on Thursday.
The OBR warned that a “recession this year is quite possible” if the virus causes “widespread economic disruption”, and predicted falling growth even before the coronavirus impact is reflected.
In its overnight assessment, the Resolution Foundation living standards think-tank delivered a stark warning over the OBR assessment, warning of “more difficult budgets ahead” for the Chancellor.
They also warn that the plans offer no room to address rising child poverty.
With their analysis warning that the “ongoing effect of social security cuts mean that child poverty risks rising over this parliament”.
“Nothing in the Chancellor’s £203 billion spending package sought to address this challenge.”
The Daily Mirror is calling on Prime Minister Boris Johnson to increase child benefit by £5 a week to end the scourge of child poverty.
Without action the number of kids in poverty in the UK is set to rise from 4.1million to 5.2million in the next two years.
Our Give Me Five campaign wants an immediate increase in child benefit – a move which would lift 200,000 children out of destitution.
We also want the Government to restore child tax credits, to scrap the two-child limit and to axe the benefit cap.
Resolution Foundation chief executive Torsten Bell said: “The OBR managed to deliver an incredibly grim, and yet still unbelievably optimistic, pre-pandemic markdown to the UK’s economic outlook – dealing a £600 a year hit to every household in Britain.
“In reality, once we take the economic impact of coronavirus into account, this is the weakest official growth outlook on record.
“And having finally returned to peak pay this year, real wage growth is set to weaken every year of the forecast period.”
Before the impact of coronavirus is seen, growth was expected to fall to 1.1% in 2020, down from 1.2% last year and dramatically lower than the OBR’s previous estimate of 1.4%.
The Resolution Foundation also warned of “big income shocks” for self-isolating workers with two million low-paid employees still lacking Statutory Sick Pay entitlement.
Mr Sunak said he was taking a “prudent” approach to the public finances despite a Budget that amounted to the biggest giveaway since 1992.
He told the BBC: “I make absolutely no apology for responding in the short term in scale to the immediate threat that we face from coronavirus.
“I think that’s the right thing to do for the economy, we need to help businesses have a bridge to get to the other side.”
But he added: “In the medium term, as you will see from the figures, there is actually responsible economic management and it’s because we’ve had responsible economic management for several years that I’m able to stand here in a strong position to say that we will do whatever to get through this.”
