Bulletin: Increased poverty, taxes, new government
27 June 2024Featuring new government impact, new Viewpoint report, taxes, poverty and availability.
New government impact
This time next week, the results of the UK General election will be known. Our new Viewpoint report launches on 11 July. Be the first to receive it:
To understand how the results of the general election will impact the food and consumer goods industry
To understand the economic landscape the new government will inherit, an overview of consumer sentiment and government policy outlook
To receive our new food inflation forecasts
Tax warning
The Institute for Fiscal Studies has warned that “huge decisions over the size and shape of the state will need to be taken, that those decisions will, in all likelihood, mean either higher taxes or worse public services… it will be a considerable surprise if no other taxes are increased over the next five years.”
IGD Opinion
Any move to raise taxes has the potential to impact consumer spending power, particularly affecting food and grocery and foodservice spend.
Both Conservative and Labour manifestos pledge that there will be no increase in income tax, VAT or National Insurance in the next Parliament. Since these taxes make up the bulk of government income, the parties are restricting their operational flexibility. It is hard to see how other manifesto commitments might be met without either major spending cuts or increases in other taxes.
IGD does not anticipate that fiscal activity will bring rapid improvement in household spending power in the next Parliament, and it is easy to envisage that necessity will compel future Chancellors to either raise taxes or cut benefits, whatever their political preferences.
Increased poverty
The TUC has reported that the number of children from working households growing up in poverty has risen by 900,000 (44 %) since 2010. There are now 3 million children in poverty from working households.
IGD Opinion
While real wages are rising again, this data on poverty reinforces the view from our IGD ShopperVista research that an income divide still dominates consumer sentiment. Many households are still struggling financially. Delivering on value is still highly important.
Availability
Our latest consumer research reveals that just 47% of adults aged 18+ reported poorer availability of some food and groceries in-store or online recently. This has changed little over the last two months and remains one of the lowest levels recorded since first measured in 2021.