Macroeconomics: UK economy, IB Economics
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October 16, 4:11 AM
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UK economy grew slightly in August ahead of key Budget

UK economy grew slightly in August ahead of key Budget | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 16, 2:05 AM
The 0.1% growth follows a slight contraction in the economy during July, official figures show.
Graham Watson's insight:

Economic growth. Of 0.1%. If you can even call that growth. 

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Macroeconomics: UK economy, IB Economics
Economy
A brief overview of relevant articles for IB and A-Level all relating to the UK economy
Curated by Graham Watson
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October 16, 4:20 AM
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Rachel Reeves should consider welfare cuts in budget, IFS says | Budget 2025 | The Guardian

Rachel Reeves should consider welfare cuts in budget, IFS says | Budget 2025 | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 16, 1:00 AM
Thinktank urges chancellor to take ‘bold’ action on benefits and pensions to placate jittery financial markets
Graham Watson's insight:

Same report different perspective - the IMF are calling for welfare cuts as well as tax increases, according to the Guardian, with scrapping the pensions triple-lock among the measures suggested.

 

I'd be amazed if they did this - given the politics involved - and the other benefit cuts also seem likely to be politically unpopular, even if they might make economic sense. 

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October 16, 4:10 AM
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Rachel Reeves urged to make Budget 'bold' or risk future tax rises

Rachel Reeves urged to make Budget 'bold' or risk future tax rises | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 15, 7:02 PM
The Institute for Fiscal Studies says the chancellor needs to find £22bn to make up a shortfall.
Graham Watson's insight:

The influential IFS have called upon the Chancellor to be bold in the Budget, with a specific call for tax rises to signal that the commitment to the manifesto fiscal rules is upheld. 

 

There's not much detail but you'd imagine it will be a mixture of tax rises and tax reforms that will find the £22m the Chancellor is needing to find. 

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October 15, 3:06 PM
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Rachel Reeves says tax rises and spending cuts on budget agenda, citing Brexit impact | Budget 2025 | The Guardian

Rachel Reeves says tax rises and spending cuts on budget agenda, citing Brexit impact | Budget 2025 | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 15, 5:33 AM
Chancellor also blames austerity and ‘ongoing impact of Liz Truss mini-budget’ for growing shortfall in public finances
Graham Watson's insight:

More pre-Budget material, if you can face it, and the chance for the Chancellor to spin a narrative, as well as a prospective use for AI. Summarising the planning application for the Lower Thames Crossing. 

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October 15, 3:41 AM
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The Guardian view on the IMF’s warning: Britain’s economy runs hot for profits, cold for pay | Editorial | The Guardian

The Guardian view on the IMF’s warning: Britain’s economy runs hot for profits, cold for pay | Editorial | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 14, 1:59 PM
Editorial: Labour is misreading the economics – leaving it unable to deal with the G7’s worst inflation and flat living standard
Graham Watson's insight:

This Guardian editorial is interesting because it could apply to much of the last 30 years which has seen a redistribution of income away from labour in favour of capital. This has meant that firm owners' profits have increased at the expense of workers' pay and no government has thought to tackle this. 

 

And to be fair, they are right: globalisation has rewarded those operating in global markets, not least the myth of the "global market for talent" among CEOs, and technological change has also discriminated against the low skilled. Theoretically, the better-off should have been able to compensate those made relatively worse-off - an application of sorts of the Hicks-Kaldor criterion - but this simply hasn't happened. 

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October 14, 3:35 AM
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UK retail sales growth cools amid fears over budget tax rises | Retail industry | The Guardian

UK retail sales growth cools amid fears over budget tax rises | Retail industry | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 13, 7:02 PM
Inflation also hitting sales, says industry body, as Barclays says credit card spending fell in September
Graham Watson's insight:

The sense that growth is slowing is confirmed by the latest British Retail Consortium (BRC) data that report a slowing of retail sales, something further supported by credit card spending data provided by Barclays.

 

Retailers are still fearful of the Budget, having only just digested higher costs in the form of employers National Insurance contributions in the last Budget.  

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October 13, 3:24 AM
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Rachel Reeves should avoid 'half-baked' tax fixes in Budget, says IFS

Rachel Reeves should avoid 'half-baked' tax fixes in Budget, says IFS | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 12, 7:21 PM
The think tank says the government should seize the opportunity to reform the tax system.
Graham Watson's insight:

The Institute for Fiscal Studies has published its Green Budget and is advocating for tax reform to be the centrepiece of this year's Budget. Given the existing fiscal rules and the government's manifesto pledge not to increase income tax, National Insurance and VAT for working people, the IFS reckons that it's time to reform both Council and Capital Gains Tax, with the former, in particular seen as regressive and outdated.  

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October 9, 2:01 PM
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Stamp duty: Five ways abolishing the tax could change the housing market

Stamp duty: Five ways abolishing the tax could change the housing market | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 9, 10:36 AM
Kemi Badenoch says a future Conservative government would scrap stamp duty, but what might the impact be?
Graham Watson's insight:

Yesterday's announcement by Kemi Badenoch, proposing the abolition of Stamp Duty garnered some headlines, and was trailed as helping people get on the housing ladder. Has it really come to this? It's back to the early 1980s Thatcherite era. If only we had more council homes to privatise, to bribe the electorate, let's crack on.

 

As it is the abolition of Stamp Duty is a regressive move - with the greatest gains going to those buying the most expensive houses, and it's also likely to push house prices up, meaning that the poorest - and those who the rhetoric will portray as being 'helped' by this move will still be unable to afford housing.  

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October 8, 2:17 AM
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Lifetime of earnings not enough for UK workers to join wealthiest 10%, report says | Inequality | The Guardian

Lifetime of earnings not enough for UK workers to join wealthiest 10%, report says | Inequality | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 7, 7:01 PM
Research finds it would take average worker saving all their earnings for 52 years to match wealth of richest 10th of society
Graham Watson's insight:

The Resolution Foundation flags the extent of wealth inequality in the UK noting that it would take the average worker 52 years, saving all their income to accumulate enough wealth to be in the wealthiest 10% of the population. 

 

Is this too high a level of inequality? And what causes such wealth disparities? It's worth thinking about because the answer isn't that one group work exceptionally hard and the other group are just lazy. 

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October 7, 2:13 AM
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Aston Martin in profit warning amid US tariff woes

Aston Martin in profit warning amid US tariff woes | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 6, 8:25 AM
The luxury car manufacturer saw shares tumble 11% at one point on Monday after its announcement.
Graham Watson's insight:

No surprises here, but Aston Martin, the luxury car maker, are reporting that profits are likely to be lower as a result of President Trump's tariffs. This shouldn't be unexpected. But the question is "Who's gaining?"

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October 4, 3:37 AM
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Rachel Reeves urged to break manifesto pledges to avoid ‘pasty tax’ budget | Budget 2025 | The Guardian

Rachel Reeves urged to break manifesto pledges to avoid ‘pasty tax’ budget | Budget 2025 | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 4, 1:00 AM
Labour colleagues advise chancellor against string of small money-raising measures, as OBR presents forecast
Graham Watson's insight:

It looks like the Budget is, as ever, going to be a series of compromises, with the main concern being whether the government's manifesto pledges are going to hamstring its ability to formulate policy.

 

The commitment not to increase income tax, National Insurance or VAT - which make up 75% of tax revenue - means that there's a concern that any tax increase are going to be bitty and not coherent. However, breaking the manifesto pledges would come at high political cost. 

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October 2, 2:04 PM
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Rachel Reeves could raise £45bn in taxes and keep promises, report says | Economic policy | The Guardian

Rachel Reeves could raise £45bn in taxes and keep promises, report says | Economic policy | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 2, 1:28 PM
Chancellor has ways to cover UK deficit without breaching spirit of Labour manifesto, Morgan Stanley claims
Graham Watson's insight:

The Chief Economist of Morgan Stanley reckons that the Chancellor could find around £45bn in taxes without breaking her manifesto pledges. It seems as though freezing tax thresholds, a gambling tax, taxing the banking sector and reform of pension taxation could all raise this sort of revenue and wouldn't be as damaging to growth as some other taxes. 

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October 1, 3:33 AM
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The Guardian view on child poverty: the scrapping of the two-child benefit cap can’t come soon enough | Editorial | The Guardian

The Guardian view on child poverty: the scrapping of the two-child benefit cap can’t come soon enough | Editorial | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - September 30, 1:42 PM
Editorial: Extra services for poorer families are welcome, but real progress requires the raising of incomes
Graham Watson's insight:

Today's Guardian editorial on the abolition of the two-child benefit cap notes that it's a start as far as tackling child poverty is concerned, but that the government needs to go further in raising the incomes of the poorest families and providing better quality public services too. 

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October 1, 3:24 AM
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UK business confidence falls to record low amid rising employment costs | Business | The Guardian

UK business confidence falls to record low amid rising employment costs | Business | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - September 30, 7:01 PM
Survey of bosses shows energy prices also a concern, as Bank policymakers warn inflation may take longer to drop
Graham Watson's insight:

The latest survey of business confidence by the Institute of Directors suggests that it is at a record low level, driven by higher labour costs and persistently high energy prices. 

 

It seems this uncertainty is also a part of MPC discussions, with MPC members unsure as to the persistence of inflation, and you should know that greater uncertainty implies lower levels of economic growth.  

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October 16, 4:11 AM
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UK economy grew slightly in August ahead of key Budget

UK economy grew slightly in August ahead of key Budget | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 16, 2:05 AM
The 0.1% growth follows a slight contraction in the economy during July, official figures show.
Graham Watson's insight:

Economic growth. Of 0.1%. If you can even call that growth. 

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October 15, 3:23 PM
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Abolishing stamp duty won’t solve Britain’s housing crisis – but this radical property tax just might | Josh Ryan-Collins | The Guardian

Abolishing stamp duty won’t solve Britain’s housing crisis – but this radical property tax just might | Josh Ryan-Collins | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 15, 7:21 AM
Economists on all sides agree: rather than incremental changes, this deeply unfair market needs a ‘big bang’ moment, says associate professor of economics and finance Josh Ryan-Collins
Graham Watson's insight:

The recent round of party conferences has seen both the Conservatives and Reform state that they'd reform Stamp Duty - in the case of the former abolishing it on first residences. However, both policies make no economic sense and will simply serve to drive up house prices, something that's only going to widen income and wealth inequality and is ultimately likely to make housing even less affordable. 

 

This article suggests another approach that would actually look more closely at linking taxes on housing to the value of property and even having a Proportional Property Tax, instead of Stamp Duty and Council Tax. 

 

Tim Leunig's proposal is that all such taxes on houses worth less than £500,000, with a minimum payment of £800, should be controlled by local government, but that there should be a 0.5% levy on houses worth more than £500,00 and a 0.8% levy on houses worth more than £1,000,000 which went to central government. 

 

The author, Josh Ryan-Collins thinks that not only would this be progressive, but it would also discourage investment in property as an asset and increase investment elsewhere, potentially increasing productivity. However, as he notes, homeownership is a bit of a 'sacred cow' in British politics.

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October 15, 3:04 PM
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Rachel Reeves says higher taxes on wealthy ‘part of the story’ for November budget | Economic policy | The Guardian

Rachel Reeves says higher taxes on wealthy ‘part of the story’ for November budget | Economic policy | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 15, 2:15 PM
Chancellor hints at rises and calls out past ‘scaremongering’ over VAT on private schools and changes to non-doms
Graham Watson's insight:

Taxes are going up - especially on the wealthy - it would seem. And I have to say that I agree with the Chancellor's assessment that there's been a lot of scaremongering about VAT on schools and changes to non-dom status...

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October 14, 11:02 AM
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Young people are biggest victims of UK’s fragile jobs market | Economics | The Guardian

Young people are biggest victims of UK’s fragile jobs market | Economics | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 14, 4:35 AM
Firms too scared to take a chance on youngsters when taxes and minimum wages are higher, expert says
Graham Watson's insight:

My Year 12 economists have had an introductory look at unemployment and we focused on youth unemployment. Thus, it's nice to see an article that substantiates some of my teaching and endorses the view that youth unemployment is often the most affected broad category of unemployment when the labour market softens, with young people being the first to be fired. 

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October 14, 3:32 AM
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Wage growth slows slightly over summer

Wage growth slows slightly over summer | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 14, 2:21 AM
Annual growth in employees' average earnings was 4.7% in the three months to August.
Graham Watson's insight:

The latest labour market data suggests that the three months to August has seen an uptick in unemployment to 4.8% and a corresponding slowing of wage growth to 4.7%. It suggests a cooling of the labour market - which is a mixed signal. Growth might be slowing, but there'll also be correspondingly less inflationary pressure too. 

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October 11, 11:59 AM
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Rachel Reeves looks for extra headroom in budget to insulate UK economy against bond market | Budget | The Guardian

Rachel Reeves looks for extra headroom in budget to insulate UK economy against bond market | Budget | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 11, 2:00 AM
Chancellor hopes to raise enough funds to stop damaging speculation about breaching fiscal rules
Graham Watson's insight:

Another pre-Budget article looking at the Chancellor's commitment to meeting her own fiscal rules and thus her need to create 'fiscal headroom' - the difference between government spending and tax receipts - in this year's Budget. 

 

The current situation is that she's thought to have £10bn of headroom - a historically low level - and thus there's a decision about whether, or how much, to raise taxes, not least to assure bond markets of their commitment to adhering to their fiscal rules. 

 

The tax rises in question appear to involve charging National Insurance on rental income, reforming Capital Gains Tax and increased gambling taxes in the hope that this will resolve the issue once and for all. 

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October 8, 5:03 AM
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Rachel Reeves given extra £3bn for budget after VAT error fixed | Government borrowing | The Guardian

Rachel Reeves given extra £3bn for budget after VAT error fixed | Government borrowing | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 8, 4:20 AM
ONS says public borrowing estimates have been out by £200m-£500m a month since January
Graham Watson's insight:

It seems as though the Chancellor has a tiny fraction more wiggle room - or slightly less to worry about - because the ONS has revised down the level of government borrowing by £3bn because the amount of VAT being collected hasn't been accurately reported. 

 

It's another instance where ONS data has been called into question and imperfect information makes policymaking harder.  

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October 7, 3:12 PM
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Ineos announces job losses at East Yorkshire petrochemical plant

Ineos announces job losses at East Yorkshire petrochemical plant | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 7, 3:59 AM
Bosses blame high energy costs and cheap imports and have called on the government to intervene.
Graham Watson's insight:

This story illustrates some of the themes associated with the international trade theory that I've been teaching. In this case, a UK petrochemical refiner, Ineos, has been forced to lay-off 60 workers in Hull because it cannot compete with lower priced imports. 

 

The company argue that UK energy costs are making it uncompetitive, and that there's also been evidence of dumping that have driven it out of business. They're calling on the government to intervene; however, given the wealth of Ineos' owner, Sir Jim Ratcliffe, I fear that the government won't - rightfully - take any notice of this. 

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October 5, 3:01 PM
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Rachel Reeves’s second budget needs a narrative of fairness to justify tax rises | Heather Stewart | The Guardian

Rachel Reeves’s second budget needs a narrative of fairness to justify tax rises | Heather Stewart | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 5, 5:08 AM
The chancellor should reach for the language of solidarity and social justice that this government tends to recoil from
Graham Watson's insight:

This Guardian editorial looks at Rachel Reeves' Budget and the choices that she faces. It highlights the state of the public finances, the fact that tax rises are seemingly inevitable, but that the difficulty is going to be spinning them in such a way that makes the narrative more positive.

 

She advocates for a return to core Labour values, and focusing on social justice, child poverty and reducing inequality on the basis that voters don't always mind paying more tax if they can see a coherent case for doing so. 

 

In my experience, I'm not entirely convinced that this is the case. 

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October 2, 2:07 PM
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UK and EU poised to strike deal sparing British business from carbon border tax | Foreign policy | The Guardian

UK and EU poised to strike deal sparing British business from carbon border tax | Foreign policy | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - October 2, 12:24 PM
Exclusive: Temporary deal to shield UK exporters from levy’s impact is now viewed by both sides as likely
Graham Watson's insight:

Evidence of closer UK/EU co-operation, with a deal close to being struck to exclude UK steel producers from the EU's new carbon border adjustment mechanism (CBAM). It will provide the sector with very welcome relief and would help boost growth and give the UK and the EU to align their schemes. 

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October 2, 1:45 PM
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Tesco boss warns Reeves against further business taxes

Tesco boss warns Reeves against further business taxes | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.bbc.co.uk - October 2, 5:42 AM
Ken Murphy says he does not want more costs to be added onto business, and calls for a "pro-growth" Budget.
Graham Watson's insight:

The CEO of the UK's largest grocer, Tesco, has suggested that the Chancellor should not look to increase business taxes further in the Budget. He argues that the double whammy of higher employers National Insurance contributions, which cost Tesco £235m over the past year and the £90m cost of the Extended Producer Responsibility (ERP) programme, mean that retailers cannot afford further tax increases. 

 

However, whilst stating this, Mr. Murphy also announced that the UK's largest supermarket upgraded its profit forecast for the year, and its combined profit for the last two years was £4.5 billion, so I think he might want to keep things in perspective. 

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October 1, 3:27 AM
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Rachel Reeves to lift two-child benefit cap in November budget | Child benefits | The Guardian

Rachel Reeves to lift two-child benefit cap in November budget | Child benefits | The Guardian | Macroeconomics: UK economy, IB Economics | Scoop.it
From www.theguardian.com - September 30, 12:00 PM
Exclusive: Officials exploring options to change rule that affected 1.7 million children in Great Britain last year
Graham Watson's insight:

More Budget gossip - a mere seven weeks before it's due - with speculation mounting that Labour is going to find a way to scrap the two-child benefit cap because it's seen as the best way to tackle rising child poverty. Simultaneously, it seems as though there are also going to be attempts to reduce economic inactivity and get people back into active labour force participation. 

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