Chancellor lack of action at Spring Statement will depress economic growth

On the economy IPPR Chief Economist Catherine Colebrook said:
“The Chancellor talked about the virtue of waiting to find out your income before deciding what to spend. But this implies government has no role in setting that income, which is not the case. The Chancellor’s decision to stick with planned Corporation Tax cuts, for example, when we now have evidence that they don’t increase revenues, illustrates the government’s tendency to favour spending cuts – for ideological reasons – over revenue raising to manage the public finances.

“The Chancellor also talked about setting priorities. And yet, we are about to enter a second phase of austerity, after a hiatus - despite increasingly hearing accounts from the public about austerity not working and causing harm. With interest rates already close to zero and unable to be cut further, this move will reduce GDP by up to 2% over the next two years. This is an active choice to shrink the economy despite a growth outlook that is already slow and uncertain. It needs to be exposed for the economic illiteracy it is.”

Implied impacts of discretionary fiscal policy on GDP growth, % GDP

Source: OBR 2017

On housing, Luke Murphy, Associate Director for Environment, Housing and Infrastructure at IPPR said:

“The government has repeatedly described the housing market as ‘broken’ but it has consistently failed to set out a new vision or the required policies to deliver it.

“Increasing overall supply is important but what you build in terms of how affordable it is, it’s quality and design is equally so. IPPR research has shown that ‘affordable’ housing is all too often unaffordable for those that need it.

“More fundamental reform of our housing market is required, including action to tackle our dysfunctional land market by reforming compulsory purchase, freeing local authorities to build the genuinely affordable homes that their communities need and reforming private renting to give tenants greater security of tenure and certainty on rent.”

Contact

Sofie Jenkinson, 07981023031, s.jenkinson@ippr.org

Florri Burton, 020 7470 6154, f.burton@ippr.org

Notes

IPPR research published last year found that the provision of affordable housing was falling short in 92% of local authority areas. Moreover, the research found that affordable housing was consistently unaffordable in many parts of the country, particularly London. The national report can be found here and the report focused on London here.

IPPR’s blog post recently set out what more the government could do to tackle the housing crisis.