IFS Projects 2% UK Household Income Growth Over 2020s After Healey Budget

Healey's October 28 measures included a three-point increase in the bank surcharge to 6% on profits above £100 million, intended to finance energy bill support. The Office for Budget Responsibility recorded a reduction in fiscal headroom to £15 billion by 2029-30 from the prior £23.6 billion forecast. The IFS described the package as insufficient to alter the underlying growth trajectory and labeled it unhelpful fiddling around the edges of public finances.

The IFS baseline shows typical family disposable income rising by an average 2% across the decade, with annual benefits expenditure projected to exceed £430 billion by 2031-32. Healey stated on BBC Radio 4 that reductions in the welfare bill would occur in a Labour manner, yet conceded on Channel 4 News that no timetable exists within the current parliament. Business groups including the CBI noted the absence of measures for aviation, distribution, and financial services competitiveness.

State incentives remain fixed on preserving fiscal rules while managing rising welfare commitments and stagnant productivity. The surcharge targets bank profits to offset immediate spending pressures without addressing structural constraints on output growth. Primary records show no commitment to reallocate resources from benefits to capital investment that would expand the tax base.

Absent reforms that lift trend growth above current OBR assumptions, the 2% income path holds through 2029. Subsequent budgets will test whether revenue measures expand or merely redistribute within a constrained economy.