Spring statement 2022: Sunak leaves the most vulnerable to feel the squeeze

theguardian.com:

There have been plenty of bad years for the economy in the recent past and 2022 is shaping up to one of the worst of them. Energy bills are soaring. Taxes are going up. Inflation has returned with a vengeance. Living standards are set for their biggest fall since modern records began in the 1950s.

Faced with this cocktail of misfortune, it was always the height of optimism for Rishi Sunak to imagine he could stick to his plan of delivering a short, policy-light update on the state of the economy in a spring statement.

So it has proved. Britain’s cost of living crisis – amplified by the impact of Russia’s invasion of Ukraine – meant the spring statement would morph into what has become the chancellor’s speciality in his two and a bit years in the job, a mini-budget.

Tory backbenchers cheered lustily when Sunak pulled his rabbit out of the hat – a 1p income tax cut designed to come into force in April 2024, a month before the date being pencilled in for the next general election. But budgets – and mini-budgets – that look good on the day often look less good in the weeks that follow. And there is every risk the chancellor’s latest offering will conform to this pattern.

For a start, Sunak’s package was a lot more modest than he tried to make it sound. The package of new measures announced will provide a £9bn stimulus to the economy – or about 0.4% of the economy’s annual output.

But as Paul Dales of Capital Economics pointed out: that will still leave households facing a £20bn hit to their real disposable incomes from rising food, fuel and utilities prices over the next couple of years. Living standards, according to the Office for Budget Responsibility (OBR), are still going to be cut by more than 2% this year.

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