UK Households will be financially squeezed for the next decade according to a report by the Institute for Fiscal Studies (IFS)
UK households are already suffering one of the worst attacks on their finances since the Second World War and that the impact of the Great Recession is only now being felt.
The report warned householders that they will continue to suffer from the harsh spending cuts introduced by the UK’s Con-Dem Government for at least the next decade.
The IFS, which specialises in the UK’s public finances, said the cuts will result in greater inequality and rising child poverty, with those on lowest incomes to suffer the most. Families with children are being hit harder than others due to welfare changes – such as the freezing of child benefit.
It highlighted that in the last year, earnings, state benefits and tax credits had all fallen in real terms.
Child poverty is measured by the percentage of children in households where income is less than 60% of the average for the UK. Child poverty fell from 25% in 2000 to 20% a decade later, according to the study.
The survey also points out that families have seen the biggest fall in living standards in 30 years in the last financial year.
Robert Joyce, a research economist at IFS and a contributor to the report, said: “The current economic downturn began more than three years ago, and may seem like old news. “But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come.”
Not only are the spending cuts having a massive impact on household budgets but many believe they could push the economy back into recession.
However, Chancellor George Osborne continues to defend the cuts and he has deemed them necessary and fair in order to bring the budget deficit down.
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