Tax cuts could be on the horizon but...
In this week's In the Sheets:
Analysis by the National Audit Office (NAO) shows that waiting times for those calling HMRC have doubled between 2020 and 2023. Taxpayers spent a total of 798 years - or 7m hours - waiting on hold to speak with HMRC.
The Bank of England has opted to hold the interest?base rate at 5.25%, marking the sixth consecutive meeting where the Monetary Policy Committee has opted against raising or cutting interest rates.
Huw Pill, chief economist at the Bank of England, has said it is "not unreasonable" to think rate cuts could be on the horizon but warned there is “some way to go” in keeping inflation under control.
Tax News
Government will have to raise taxes to meet its fiscal targets, NIESR says
The National Institute of Economic and Social Research (NIESR) has warned that the next government will have no spending room for tax giveaways and will have to find ways of generating revenues amid "sluggish" growth. It said that ministers will have to implement tax rises and delay net zero investment unless the government is willing to revise the Treasury's fiscal rules, saying that weak growth and lower inflation would make it difficult to adhere to the current policy. The think-tank argued that the current fiscal rules would prevent any pre-election tax cuts and that debt would continue to rise as a percentage of national income. Analysis suggests that weak growth will cause the debt-to-GDP ratio, which is approaching 100%, to rise over the next five years, breaching the Chancellor's current fiscal rules. The think-tank predicts that the economy will grow by 0.4% in Q1 and by 0.8% across 2024 as a whole. It also forecasts that average wage growth will fall back to about 3% in 2025, from the current rate of above 6%.
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Employment
Wage growth steady but unemployment climbs
Office for National Statistics (ONS) data shows that while the unemployment rate increased to 4.3% between January and March, pay rises, excluding bonuses, remained at 6% despite predictions of a decline. Liz McKeown, director of economic statistics at the ONS, said that once inflation was taken into account, "real pay growth remains at its highest level in well over two years." The report also shows that the number of jobs on offer dropped by 26,000 to 898,000 between February and April. The number of unemployed people per vacancy rose to 1.6 in Q1, up from 1.4 between October and December 2023. The ONS said: "Although this ratio remains low by historical standards, it does demonstrate a slight easing in the labour market, with vacancies falling alongside rising unemployment." The number of people claiming benefits rose to 1.5m in April, with this up 29,300 compared to April 2023. The rate of people considered economically inactive - those aged between 16 and 64 who are not in work or looking for a job – dipped slightly to 22.1% in Q1.
Brainteaser ??
How can 8 + 8 = 4?
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