London Daily

Focus on the big picture.
Wednesday, Jul 16, 2025

Postpone tax hike or risk more poverty, UK's NIESR warns Sunak

Postpone tax hike or risk more poverty, UK's NIESR warns Sunak

Britain's government should consider postponing a payroll tax increase in due in April which combined with higher inflation could drive a 30% rise in destitution, the National Institute of Economic and Social Research (NIESR) said on Tuesday.
The academic think tank also said finance minister Rishi Sunak should increase government spending in his forthcoming budget to reflect inflation, leaving the Bank of England greater scope to tackle rising prices by raising interest rates.

Sunak is due to present new budget forecasts to parliament on March 23.

"The government has chosen to tighten primarily through fiscal policy, leaving monetary policy lagging the inflation cycle. This policy sequencing is the wrong way around," NIESR said.

NIESR predicted the number of households in destitution - which it defines as an inability to buy basic essentials - would rise by nearly a third to about 1 million if the payroll tax rise goes ahead and inflation remains high.

NIESR kept its growth forecasts largely unchanged from its last projections in November but revised up the outlook for inflation, which it expects to peak at 7% in the three months to June before returning to its 2% target in 2024.

"The Monetary Policy Committee of the Bank of England urgently needs to address the questions that are being asked about the credibility attached to its inflation target," NIESR director Jagjit Chadha said.

Last week the BoE raised its main interest rate to 0.5% in the first back-to-back rate rise since 2004 and said it would no longer reinvest the proceeds of bonds which mature from its 875 billion pound ($1.19 trillion) quantitative easing stockpile.

NIESR said it expected Britain's economy to grow by 4.8% this year - stronger than the 3.75% forecast by the BoE last week - before slowing to 1.3% in 2023 and 0.9% in 2024.

The think tank has previously criticised the overall mix of British economic policy, worrying that the BoE was behind the curve on raising interest rates and that Sunak was tightening fiscal policy too quickly.

Financial markets now expect the BoE to raise rates rapidly to around 1.75% by the end of the year.

Overall, NIESR estimated British economic output in 2025 would be 4% lower than it had forecast just before the COVID-19 pandemic, compared with a 12% shortfall several years after the 2008 global financial crisis.

($1 = 0.7384 pounds)
Newsletter

Related Articles

0:00
0:00
Close
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
President Trump Visits Flood-Ravaged Texas, Praises Community Strength and First Responders
From Mystery to Meltdown, Crisis Within the Trump Administration: Epstein Files Ignite A Deepening Rift at the Highest Levels of Government Reveals Chaos, Leaks, and Growing MAGA Backlash
Trump Slams Putin Over War Death Toll, Teases Major Russia Announcement
Reparations argument crushed
Rainmaker CEO Says Cloud Seeding Paused Before Deadly Texas Floods
A 92-year-old woman, who felt she doesn't belong in a nursing home, escaped the death-camp by climbing a gate nearly 8 ft tall
French Journalist Acquitted in Controversial Case Involving Brigitte Macron
Elon Musk’s xAI Targets $200 Billion Valuation in New Fundraising Round
Kraft Heinz Considers Splitting Off Grocery Division Amid Strategic Review
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
EU Proposes New Tax on Large Companies to Boost Budget
Trump Imposes 35% Tariffs on Canadian Imports Amid Trade Tensions
Junior Doctors in the UK Prepare for Five-Day Strike Over Pay Disputes
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
Bitcoin Reaches New Milestone of $116,000
Biden’s Doctor Pleads the Fifth to Avoid Self-Incrimination on President’s Medical Fitness
Grok Chatbot Faces International Backlash for Antisemitic Content
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
×