Rachel Reeves spring statement will make the rich richer

Chancellor Rachel Reeves has delivered the Office for Budget Responsibility’s (OBR) forecasts for the economy. While it predicts annual real household income growth of 0.6%, this figure is skewed by high earners. The actual economic outlook shows why the ideology of neoliberalism (austerity, privatisation and deregulation) is collapsing.

Rachel Reeves ignores income disparity

The incomes of low earning people at the bottom 20% versus the top earning 20% shows why the OBR isn’t providing a complete analysis. The OBR calculates real household income growth through dividing total income by the population.

But in 2022, for example, the lower earning 20% received just £13,218 in average annual income. That’s compared to the top 20%, which received £83,687 – over 12 times more.

The issue is compounded by the increased earnings of CEOs. The High Pay Centre calculated that median CEO pay increased by 6.8% in 2024/25 – far higher than the 0.6% average predicted for each year until 2029 in the forecast.

Median FTSE 100 CEO pay increased from £4.29m in 2023/24 to £4.58m in 2024/25, the highest it ever has been.

Inflation

The OBR predicts inflation will fall from 3% in January to 2% at the end of 2026. Inflation impacts the real earnings increases for households. But neoliberalism means the privatisation of essentials, which is highly inflationary. If water, energy and other utilities were brought into public ownership it would mean lower costs for every person and business.

Take the UK agriculture sector. 40% of a farm’s total costs can be attributed to energy. Since privatisation of electricity began in 1990, average prices have more than doubled from around 6p per kwh (14p in 2023 prices) to 30p per kwh in 2023, according to Ofgem and Hansard figures. Meanwhile, analysis shows that average gas prices increased by 143% between 1992 and 2022.

When it comes to the food we eat everyday, over 60% is produced in the UK. These statistics demonstrate that that there could be a significant reduction in food prices through the nationalisation of energy. On top of that, all businesses would benefit from the democratisation of essentials through cheaper running costs. In fact, the government could mandate a national price drop throughout the economy via such public ownership of utilities.

This is not the possible negative impacts of deflation. Businesses would be earning the same via a national price drop through essentials nationalisation – prices would just be cheaper at a sustained level.

The end of neoliberal ideology through such public ownership, for example, would tackle the skewed figures in the OBR forecast and bring material improvements to people’s lives.

Featured image via the Canary