Love it or loathe it, the long shadow of Brexit dominates our political weather. With good reason, of course. The long-term impact remains uncertain, but we can be sure it will be significant. In the near term, there’s no denying that the referendum result’s effect on the value of the pound – and its subsequent effect on inflation – is at the heart of the pay squeeze that has returned in 2017.

Yet for millions of low- and middle-income Britons, living standards looked under threat even when Brexit was nothing more than a twinkle in Boris Johnson’s eye. The key moment came when, fresh from the Conservatives’ 2015 general election victory, the chancellor George Osborne delivered a budget that promised to “reward work and back aspiration”.

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True to his word, he presented some very good news by introducing the national living wage – a sizeable and welcome supplement to the minimum wage for employees aged 25 and over. But the good news was eclipsed by the bad. The estimated £4bn boost from the national living wage was dwarfed by savings of £14bn from cuts to working-age welfare. What’s more, the welfare cuts are concentrated among poorer households. In the coming years, Britain faces the prospect of the first significant rise in inequality in three decades.

Do not expect a return to the 1980s though. Back then strong growth boosted living standards, even if the rich did far better than everyone else. This time round the risk is a toxic combination of rising inequality and stagnating incomes.

Faced with such a gloomy forecast, any government that’s interested in re-election must feel the need to act. In this regard, Brexit provides an opportunity. The world has clearly changed since 2015, offering the chancellor the chance to argue that so too must government policy.

Philip Hammond should, of course, introduce measures to boost employment and fix the UK’s appalling productivity performance. But the most direct way of protecting low- and middle-income households from another living standards squeeze is to revisit the welfare cuts introduced by his predecessor.

Hammond could reverse those cuts while still hitting his borrowing target. Or, if he wants to raise revenue, he can cancel planned tax cuts that overwhelmingly benefit the richest households.

Brexit undoubtedly matters. But political obsession with it must not obscure more immediate priorities. There is no deal on Brexit – good or bad – that could matter as much in the next few years to lower-income households as the government’s position on welfare.

Matthew Whittaker is chief economist at the Resolution Foundation