As things stand, Britain is heading for a monster recession and time is running out to take evasive action

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Larry Elliott has reported in The Guardian this afternoon that:

Number crunching by the chartered accountant and political economist Richard Murphy suggests the hit to living standards will be extremely painful: a 14% hit for someone on the minimum wage, 11% for someone on median earnings.

“For half UK households it's very hard to see how they have any chance of making ends meet without significant government support,” Murphy says. “This is not just disastrous for them, it also signals that a recession is very likely unless Sunak takes action now. Delay would make it almost impossible to prevent a massive downturn happening.”

It's hard to disagree with Murphy's conclusion. As things stand, Britain is heading for a monster recession and time is running out to take evasive action.

The data is in yesterday's thread, posted as a blog here.

As Larry concludes in his article:

Sunak announced a package of support for households with their energy bills early last month and that already seems inadequate. The Treasury is, though, resistant to making it more generous until it is clear what will happen to the energy price cap when it is next revisited in October.

That leaves state benefits, which are due to rise by 3.1% next month – about five percentage points below the likely rate of inflation. Raising benefits in line with the expected inflation rate would protect the most vulnerable and boost the economy. It would be costly but not as costly as doing nothing.

As he notes, without this (and I suggest, the measures I also suggest) this could be the worst ever budget (for that is what it will be) since Philip Snowden cut benefits in the 1930s during the Great Depression. Churchill taking us back onto the gold standard in the 1920s would have to also be in the running for comparable catastrophic errors.

I await to see what happens - but suspect very strongly that I will have few good things to say come 1.30pm on Wednesday when I'll be discussing this on BBC Radio 2 with Jeremy Vine.


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