A report released by the Institute for Fiscal Studies (IFS) this week, has revealed its findings and it has predicted that average middle-income families with two childen, in Britain, will be nearly £1,800 a year worse-off by 2015.
The main findings of the report, states that families with two children will see a fall of £34 in their weekly incomes, with childless couples likely to lose £1,248 a year, or £24 a week, after adjusting for inflation.
You may be wondering the reasoning behind the findings? Because incomes are failing to keep pace with inflation and due to the recent changes to the benefits system, middle-income families will be hit the hardest between now and 2016. Those who earn less than £12,000 a year will also see their spending power fall by 4.5% between 2011-12 and 2015-16.
As most of the falls in income associated with the recession has already taken place for higher income groups, the full effect is only now being felt for lower-income groups, with the worst still predicted to come. The changes in benefits, which have been introduced to help cut the government deficit is one of the main contributing factors for this, alongside the benefits cap, changes to housing benefit, the localising of council tax benefit and the end of disability living allowance. The IFS are therefore also predicting that although inequality fell in the years after the recession, it is back on the rise, and will continue to grow.
The lack of pay rises in correlation to higher inflation, with public sector workers having their pay frozen also, is another major contributing factor as to why working families will struggle. Workers are also seeing lucrative shifts being dropped, a stop to over-time pay, and annual bonuses being scrapped, and this will all affect the middle-income based jobs for the worse.
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