Ah, the ‘squeezed middle’ reappears in a time of Brexit August 10, 2016Posted by WorldbyStorm in Uncategorized.
What is the cost of the bust to our annual income tax bills ? About €2,500 on average, if you want a quick answer – and a good bit more for most middle- to higher-income employees. That is the rough increase in the size of the average income tax bill since the crash. If we are wondering why consumer spending has been slow to take off and why confidence is volatile, maybe the answer is here
Well, if that cost is more for middle and higher income employees (by the by, revealing differentiation there between average and middle, no?) is that now how it should be? Still, he notes that in the last year things have eased somewhat.
The signs were that households were starting to get used to what you might call a “new normal”. They had some money to spend, even if it wasn’t as much, for most, as before the bust. They were also confident enough that growth was going to continue and that there was nothing on the horizon likely to hit their income levels.
And so this vital cog of economic recovery – consumer spending growth – was finally starting to turn.
Recently, cause for caution has grown. Since the Brexit vote, there have been signs of slowing in growth in manufacturing and services, while consumer confidence has slipped, though not too rapidly yet. There was a fall-off in VAT and excise duty in the latest tax figures for July.
The economic signals from the UK are poor and a leading recruiter there said yesterday that the jobs market was in “free fall”. This is bound to have some impact here. Most forecasters have cut their predictions for growth here, particularly for next year, though most still expect reasonable growth of 3 per cent plus.
The points about Brexit tally with other commentators, including Larry Elliott in the Guardian, as noted earlier. But the reality is there is no ‘new normal’. In this period of Brexit with all the uncertainties that that brings both in terms of the economy and political activity the idea that the status quo ante is going to return is simply untenable.