The measures announced in Budget 2026 will result in small income losses next year, according to an analysis from the Economic and Social and Research Institute.<\/p>\n
In its post-Budget briefing, the ESRI said the losses will average 2% of household disposable income.<\/p>\n
The organisation said the withdrawal of temporary cost-of-living measures is “responsible for much of this effect”.<\/p>\n
The ESRI said there is variation in how the Budget will affect households of different income levels, with slightly higher losses, of 2.5% of household disposable income, expected for low-income households.<\/p>\n
The research institute said the withdrawal of temporary cost-of-living measures, which have been a feature of the last number of budgets, will result in a reduction in households’ standard of living next year but it also said withdrawing the measures was “inevitable”.<\/p>\n
“This loss will be felt across the income distribution, with low-income households losing significantly more as a proportion of their disposable income compared to high income households.”<\/p>\n
The ESRI has concluded that the withdrawal of the temporary measures will result in “losses of 4.1% of disposable income for the lowest income households compared to losses of 0.3% for higher income households”.<\/p>\n
The analysis found that the losses will be exacerbated for high-income families due to “the freeze to tax bands and credits, which amount to an effective tax rise if wages grow at their forecasted rate of 3.7% in 2026”.<\/p>\n
The organisation said for low-income families, the withdrawal of one-off measures will be “partly cushioned by the welfare package, which is mostly above forecast inflation and wage growth”.<\/p>\n
And if they are passed on to consumers, the ESRI said the extension of the VAT cut to electricity and gas and the introduction of a cut to VAT on hospitality and hairdressing “may result in small income gains, which are larger for high income households”.<\/p>\n
Associate Research Professor at the ESRI Claire Keane said the “inevitable withdrawal” of the temporary cost-of-living measures will impact those on lower incomes more.<\/p>\n
“Some, but not all, of this loss is compensated by increases in social welfare rates that are ahead of both price and wage growth,” she said.<\/p>\n
The ESRI said the budgetary measures targeted at children, such as increases to the Child Support Payment and the Working Families Payment, “are well-targeted”.<\/p>\n
“However, their effect on child at-risk-of-poverty rates will be small as they are accompanied by the withdrawal of many temporary measures.”<\/p>\n
The analysis estimates that these measures will lift around 2,000 children out of income poverty, compared to a budget pegged to income growth.<\/p>\n
However, it said many more targeted measures will be necessary to achieve the government target for child consistent poverty of 3% or below.<\/p>\n
Associate Research Professor at the ESRI Karina Doorley said Budget 2026 begins the process of tackling child poverty and deprivation.<\/p>\n
“While the child-related measures are well targeted, they result in a relatively small decrease in the child poverty rate as they are accompanied by the withdrawal of temporary measures.”<\/p>\n
She said: “More investment will be needed to achieve government targets, but there is a very strong economic case for making this investment as the cost of child poverty to the State is estimated at 4% of GDP per annum.”<\/p>\n","protected":false},"excerpt":{"rendered":"The measures announced in Budget 2026 will result in small income losses next year, according to an analysis…\n","protected":false},"author":2,"featured_media":190156,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-190155","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/190155","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=190155"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/190155\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/190156"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=190155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=190155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=190155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}