Britain, Bnp Paribas, Francis So Grady discussed on Bloomberg Daybreak Europe

Automatic TRANSCRIPT

Day wins For odds and more information this VA lottery dot com Put out the full report on the Bloomberg terminal this morning From latterly BNP Paribas They have really quite an extraordinary report out talking about how housing and child care costs coupled with wealth inequalities risking social unrest in Britain Protest and extremism is what they talked about They said for example that the UK did worse even than Latvia That this is the kind of core promise of a capitalist democracy that this generation young generation between 26 and 40 are going to be worse off than their parents Put this into context for us I mean I do think this is a kind of an extraordinary moment in Britain where households are just under so much pressure and there could be significant consequences People face that hit today incomes I think that's right As you alluded to in the introduction expecting now a hit to real household disposable incomes of more than 2% next year the worst we've had in any single year since the late 1950s So we just don't have experience in recent times of how the public are going to react to such a squeeze on the living standard It's not something very accustomed to There is a generational element to this one of the things that's going on at the moment in the last few months of government has announced change to the student loan system which basically amounts to an effective tax rise to low to mid learning recent graduates the vast majority of whom are young And then we also saw yesterday the Chancellor saying well the national insurance rise is still going to go ahead That's a tax on earnings It's not paid by those who receive their income from pensions But then I'm going to cut income tax in the middle of this decade which will benefit those pensions So it's effectively we're paying for a tax on pensioners by increasing the tax on earnings So the exacerbating those generational goals I think that I wouldn't build perhaps so far as to predict social unrest But I think we might also worry about the potential for industrial action and strike action particularly in the public sector where for low inflation pay awards seem a certainty That's going to be tricky to wear for lots of public sector unions doctor nurses teachers et cetera So yes it could be a very difficult few months We shouldn't underestimate just how big the economic challenges are Yeah the two you see the trades union Congress general secretary Francis so Grady saying that we did not get the urgent help with sawing bills that families need that was her quote In terms of the reaction So then I suppose my question again Ben is what could conservative MPs what could this government think about doing differently I mean the leveling up agenda is there it sort of answers some of those issues around pressure on households on generational change on areas that are not performing well But we didn't get that much in terms of the leveling up agenda if anything from this spring budget So just a brief word on what the government might need to deliver in the autumn budget the big moment in September I think I will be surprised if it has to come back before the autumn Given the reaction to this and given how badly we know households are going to be squeezed Do you remember that a lot of this hasn't happened yet Gas bills households I haven't even gone up yet The tax charge hasn't kicked in yet It's going to be next month when things start to be felt And I think that the klamath is my help is only going to grow He might for instance want to come back with more Yesterday you have the poultry 500 million discretionary fund to the most vulnerable He might want to come back with more as it becomes more apparent just how hard these number households are being hit Those households have cost concentrated in some of those poorer parts of the country that government is so keen on leveling up He might also need to think about the fact that he's talked about public services being key and like supporting local government as being key or leveling up Well higher inflation means that spending plans are now less generous in real terms as you're going to provide a top up to maintain the generosity of those Is he going to think about the fact that public sector employment makes up a much bigger share of local jobs in potential at the northeast than it does in London Is he going to think about how squeezing product sector paying and posing the 5% real pay cut will help those local economies So I think he will have to come back perhaps in my health in the autumn But ultimately we are as a country now as an energy and partner in the face of global energy prices Just we are going to be worse off They can't protect us from that forever but he could certainly do more to help those at the very bottom if you so wished Ben thank you so much for your time lovely to speak to you Ben taranco is senior research economist at the institute for fiscal study So rather dissatisfied with what the Chancellor had to offer yesterday it was overwhelmingly welcomed though as a spring statement by conservative MPs of course.

Coming up next