Households to lose £1000 a year as austerity measures bite
Annual incomes for families are likely to reduce dramatically both this year and next after the budget watchdog forecast the slowest economic recovery since the Great Depression.
Households are set to lose around £1000 in income per year – on average families’ income fell by £923 in 2011 – which equals a £24 billion decline in family spending power.
The announcement by Chancellor George Osborne that there will be a further two years of austerity measures means that next year disposable income will fall by around £20 per week for the average family.
Mr Osborne now plans to cut £8 billion from public spending in 2015-16 and a further £7 billion in 2016-17, in order to meet his target of removing Britain’s structural deficit.
The Institute for Fiscal Studies released a statement yesterday: “Two more years of substantial real public spending cuts: this is what the Chancellor has promised in response to the Office for Budget Responsibility’s dramatically worsened macroeconomic forecasts.
“Until now we had been thinking of four years of cuts as unprecedented in modern times. Six years looks even more extraordinary.”
According to the Office of Budget Responsibility (OBR), there is a one in three chance of a recession next year. OBR Chairman Robert Chote told the Mail Online: “The chances of a much worse outcome are much greater than the chances of a much better one.”
He continued: “The economy has grown much less strongly this year than we expected at the time of the March Budget, largely because higher than expected inflation has squeezed household income and consumer spending.”