Paul Johnson, director of the Institute for Fiscal Studies (IFS), has spoken about what has left the UK in a position where yesterday’s autumn statement – which will leave more than half of households worse off – was deemed necessary. He said: “Let’s start by cutting investment spending, that was something announced under the last Labor government and continued by George Osborne. “Cutting spending on education, particularly massive cuts to vocational and post-secondary education, but also to schools during this period.” Politics Live: Middle England is in for a shock’ and higher taxes ‘here to stay’ – Johnson added that “quite clearly, Brexit was an economic own goal”. “There may be other reasons for Brexit, but from an economic point of view it was very bad news indeed and continues to be bad news, particularly the way we did it, the hard type of Brexit we had, distancing ourselves from the single market,” he said. Mr Johnson also pointed to Ms Truss’ mini-budget with the tax cut – which caused an estimated £30bn loss as it sent markets into freefall, the pound plummeted, mortgage rates rose and forced the Bank of England to step in to stop pension funds collapsing. “Obviously the mini-budget of a few months didn’t help. In fact, that was another big own goal,” he said. Read more: Middle earners face same tax hit as six-figures | Ed Conway While most of the policies of the short-lived Truss administration have now been reversed, Mr Johnson said the political instability of recent months had also not been good for the economy. “There have been three prime ministers and four chancellors within a few months. “And reversing policy here, there and everywhere, being uncertain about your trade relations with the rest of Europe, having corporation tax going up and down and around, all of that is bad for growth.” The chancellor presented his much-anticipated autumn statement to parliament on Thursday, packed with £55bn of secret tax and government spending cuts in a bid to plug the black hole in public finances. Use Chrome browser for more accessible video player 1:38 “Tough time for everyone,” Hunt says He sought to blame Russia’s invasion of Ukraine for the “global energy crisis, a global inflation crisis and a global economic crisis” and said “we have faced bigger challenges in the past”. But Labor blamed “12 weeks of Tory chaos” and “12 years of Tory economic failure” for the bleak outlook. The independent Office for Budget Responsibility (OBR) has warned that UK household disposable incomes will fall by 7.1% over the next two years – the biggest drop on record. Mr Johnson warned this would “hit everyone”, adding that “middle England is in for a big shock”. “The truth is we just got a lot poorer. We’re on a long, hard, unpleasant journey; a journey made more arduous by a series of economic goals,” he said. Read more: Chancellor’s autumn statement had all the makings of a Labor budget | Beth Rigby As a result of Mr Hunt’s announcements, the UK tax burden will now be at its highest since the Second World War and there are stark warnings of increased bills and higher unemployment as the recession takes hold – as well as forecasts of the economy still shrinking by 1.4% in 2023. Speaking earlier on Sky News, the chancellor said it was “a difficult time for everyone” but tax rises and spending cuts were needed to get the economy “on an even keel”. “The next two years will be difficult,” he said. “But I think people want a government that takes tough decisions, has a plan that will bring down inflation, stop these big increases in the cost of energy bills and the weekly shop, and at the same time take action to overcome this. tough period”.
