The public health response to the COVID-19 pandemic is likely to reduce household incomes as workers lose their jobs, earnings fall, and plummeting share prices and interest rates lead to lower incomes from savings and investments. Newly released official statistics on incomes and poverty in the UK in 2018–19, published by the Department for Work and Pensions (DWP), show this downturn will come after a sustained period of income stagnation in the latter half of the last decade – which itself followed only a brief recovery from the late 2000s recession.
If the pattern observed in the first ten months of the financial year continues for the next two, government borrowing will be £44 billion this year. This would be £3.5 billion lower than implied by the OBR’s restated March 2019 forecast. But it is worth recalling that just four years ago, in March 2016, a surplus of £10.4 billion was forecast for this financial year: i.e. we have seen a deterioration of around £55 billion in four years.
