High growth unlikely to reduce poverty, analysis finds

Rachel Reeves' growth strategy "will not move the dial on poverty" during this parliament, according to the Joseph Rowntree Foundation (JRF).

In her first speech as chancellor, Reeves said "sustained economic growth is the only route to the improved prosperity that country needs and the living standards of working people".

But in new analysis, the JRF warns this may not benefit either working age or child poverty.

It says that unless the government "invests in the social foundations now, not only does the economy risk leaving millions behind, but growth itself may be harder to achieve and harder to sustain".

The analysis is based on the Office for Budget Responsibility (OBR) estimates.

JRF predicts that poverty in the UK will remain "broadly flat" at around 14.5 million people in 2024-28, and that this will not improve even if the UK has the highest GDP per capita growth in the G7 and achieves an 80 per cent employment rate.

That scenario would produce a "small drop in poverty" of 100,000 to 200,000 people by 2028, it is claimed, with living standards between those on low and middle incomes "broadly unchanged".

The charity wants to see money directed to housing, welfare and public services as "part of the strategy for securing lasting growth".

Alfie Stirling, director and chief economist of the Joseph Rowntree Foundation, said: "There is something that both millions of families, and rebuilding the foundations of the economy, have in common: neither can afford to wait for growth. Families that don’t have the means to stay secure and healthy may contribute less at work, spend less today and invest less in tomorrow.

"The government’s current approach not only risks leaving millions behind who can least afford it, it also risks failing on its own terms to deliver sustained and resilient economic growth. Unless business investment is matched with stronger social foundations from the start, growth will be harder to achieve now, and easier to lose to the next economic shock."