The middle class will feel worst effects of economic downturn

According to a report from the Resolution Foundation, an independent non-profit research group, the U.K.’s middle class is likely to suffer the most from ongoing economic hardships.  It is estimated that in the coming year, middle-income families will have about £4,000 less for discretionary spending than last year, and the trend will continue in the coming decade.  The research indicates that the high-income bracket will be able to benefit from a recovering economy, and the low end will benefit from subsidies and other breaks, but those in the mid-range will miss out.

Based on the findings of the Resolution Foundation, it appears that wages in the middle class have not kept pace with overall economic growth since the 1970’s. In actual spending value, the average low-to-middle range earner will be making no more in 2015 than they were in 2003.

Labour leader Ed Miliband says that spending cuts combined with increased costs, including VAT, will put the greatest strain on families with children, due to the reduction or outright scrapping of tax credits and public childcare assistance, amongst other things.  He noted that the problem has been ongoing for many years but no one, including the Labour government, has really addressed it.  He said that new approaches were necessary, and one suggestion was implementing tax incentives for businesses to raise salaries above minimum wage and instigate more training programs, allowing employees to keep up with changes in job requirements.

Low to middle income is loosely defined as £12,000 to £30,000 per year for singles or couples without children.  For a couple with three children the range is up to £40,000.  Those with children will be worst hit by the spending cuts in areas such as free public child care centres as well as higher charges for public services like swimming pools and sports centres.  From all indications, if measures are not taken now, those with lower and medium-range income will have to work even harder just to survive.


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