These tax increases will mean an average fall of £f5 a week in a family's income, according to the TUC economic committee. the budget will hit the poor hardest of all.
The Low Pay Unit estimates that a further 13,000 families will join the 100,000 already caught in the poverty trap, whereby they lose more in tax and benefits than they gain in income if their earnings improve.
Neither were there any big hand-outs to industry. was, In nowe s words, balance between consumers and industry' vvnie last year trade unionists managea to secure a small rise in their real earnings, company profits change all that.
But the Confederation of British Industry called it 'at least a brush-off and at worst a kick in the teeth'. The Financial Times share index reacted by largest fall in a single day since Howe's first Why did a bosses' government give so little of the money it had wrenched from consumers to its friends in industry? The reason lies in the difficulties the Tories have had in implementing their monetarist strategy.
The core of their plan is to boost profits by weakening trade union organisation with the threat of unemployment. certainly been furthered with most forecasters now expect the number ot registered unemployed to top 3m by the end of the year.
Financial aims Monetarism also has a financial aim. holding down the money supply amount of government famous Public Sector ment, PSBR for short) the government hopes to help industry by lowering interest rates and However, creasingly difficult. spending cuts, workers to accept a cut in real wages, the goverment's need to bail out BL and BSC, and capitulation the prevented public spending falling.
Un the other hand, revenue has fallen by more than forecast because the recession has been deeper than it expected. As a result the PSBR was heading for a level twice as high as aimed for last year.
The government's view is that if the extra revenue raised in the budget had been handed back to industry, rather than being used to reduce the PSBR, then the cut in interest rate, also announced in the budget, would only have been temporary.
Last week's budget will ensure that the current recession will be lead to unemployment. monetarist philosophy left him little choice to do anything else.
What Howe is working people will further reduce their wage Claims But if the reverse happens, Howe's third budget may well prove the harbinger of the fall of the Tory government.
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