Income distribution in times of austerity: why the cuts are likely to widen the gap
By Blog Editor, IOE Digital, on 22 July 2015
Nicola Pensiero.
Yesterday, the House of Commons passed a bill that will cut £12bn in welfare programmes. Chancellor George Osborne argues that the government has no choice but to continue reducing the budget deficit. When announcing the plan, he pointed to the unfolding Greek crisis to reinforce his idea that a country has to be in control of its own borrowing or the “borrowing takes control of the country”. The plan is expected to move Britain “from a low-wage, high-tax, high-welfare economy to the higher wage, lower tax, lower welfare country we intend to create”. Despite the proclaimed intentions, a likely consequence of these planned cuts is an increased polarisation of household incomes, as my recent research shows. (more…)