Poverty unchanged, despite austerity

AVERAGE pay will rise over the next four years and poverty levels will remain broadly unchanged despite claims of continued ‘austerity’, say economists.

The Institute for Fiscal Studies said incomes are projected to grow by 4 per cent in real terms until 0 1. And absolute poverty (after housing costs) is projected to remain roughly unchanged.

However senior research economist Andrew Hood warned this pay growth was low by historical standards, adding: ‘Growth in average household incomes over the next few years is likely to be sluggish at best. If workers’ earnings grow as the Office for Budget Responsibility expected back at the March Budget, median income is projected to rise by just 4 per cent over the next four years – about half as fast as was normal before the financial crisis.’

The report also forecast that benefits changes would increase absolute child poverty. The larger projected rises would occur in areas where more families are likely to be adversely affected by the new two-child limit on means-tested benefits.