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Miliband warns of squeeze on middle

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Ed Miliband will warn today of a “cost of living crisis” that will leave middle-earners struggling even if the economy recovers.

The Labour leader has seized on the launch of an independent thinktank inquiry to renew his focus on what he calls the “squeezed middle” - and admit Labour forgot them in the past.

Data from the Resolution Foundation suggests wages for low and middle earners have failed to keep pace with wider economic growth since the 1970s.

Average pay was set to be no higher in 2015 than it was in 2003, it suggested.

And Mr Miliband believes a “sustained period of wage stagnation” coupled with the coalition government’s spending cuts and benefit reforms will further worsen the trend.

Speaking at the launch of the Foundation’s 18-month Commission on Living Standards, Mr Miliband, right, is expected to say families with children will be worst affected.

“There is now a very real risk that we will see the longer-term pressure on wages for those on middle and low incomes colliding with rising prices, tax and benefit changes introduced by this Tory-led government and public service cuts which all hit families with children the hardest.

“My fear for those on middle and low incomes is that more and more families will face a cost of living crisis that will see them left behind, even as the economy eventually recovers.

“The failure of the government is two-fold: they are not taking steps to build a different kind of economy, and they are hitting lower and middle-income families hardest in the way they are cutting the deficit.”

Labour leaders in the past judged “fairness” in terms of the gap between the richest and poorest as for decades most middle earners for decades shared in rising prosperity.

“Over the last 20 to 30 years that once-safe assumption has broken down. While those at the top have done well, middle and low earners are no longer guaranteed the proceeds of growth.

“Our economy is increasingly unfair not just for those at the bottom but for many of those in the middle as well. The Conservative-led government is making the situation worse by cutting tax credits, raising VAT, hitting ordinary families hardest.”

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