The National Institute of Economic and Social Research outlines the tough economic forecast for the UK, with slow growth prompting potential tax increases to support public services, contrasting with Australia’s more optimistic economic scenario.
The National Institute of Economic and Social Research (NIESR) has reported that the UK faces the necessity of raising taxes to maintain public services due to slow economic growth. According to NIESR’s recent economic outlook, the UK experienced a marginal growth of 0.1% in 2023 with projections of 0.4% growth for the first quarter of 2024 and 0.8% annual growth. These rates are considered low and reflect the Organisation for Economic Co-operation and Development’s predictions of continued tepid economic performance. A potential interest rate cut in August and a slight improvement in living standards are anticipated, although income inequalities remain problematic, exacerbated by increasing housing costs and static tax thresholds.
Stephen Millard from NIESR highlighted the challenging economic conditions, with a particular need for infrastructural and green investments, which may compel the forthcoming government, potentially post-2024 elections, to either increase taxes or amend fiscal policies.
Meanwhile, in Australia, the 2024 budget outlook appears favourable for workers due to escalating wages and tax relief, as stated by Treasurer Jim Chalmers. Wages are reportedly growing at the fastest rate in 15 years, with expectations of a 3.5% rise in real household disposable income. Despite demands from advocacy groups, there is reluctance to raise jobseeker payments over concerns of fuelling inflation. Instead, the government might focus on rent assistance and energy relief programmes. The budget discussions continue to revolve around how to effectively address the cost of living and reduce inequality in Australia.
