More than 84,000 people in Wales are unemployed

Ahead of next week's budget announcement, Oxfam Cymru have warned a reduction in the 50p tax rate would "disproportionately harm the poorest people in Wales."

The charity believe if Chancellor George Osborne offers a tax break to higher earners at the same time as cutting working tax credits this will result in a more divided Britain, hitting poor communities in Wales particularly hard. But the South Wales Chamber of Commerce say they believe any reduction tot he 50p rate will have very little impact on the country.

Director Graham Morgan said: "We are struggling to see what difference the tax break would make to the majority of Welsh people. I would prefer to see the rate stay as it is and the taxable income rate raised slightly instead.

"That would give people in this bracket higher disposable income and greater spending powers, providing a boost to the economy. Cutting the 50p tax rate will only benefit a few people, who would most likely spend some of that extra money on holidays abroad."

Stephen Doughty, head of Oxfam Cymru, said: "This is not just about those who are out of work. It is crucial that we recognise many working households in Wales still struggle to make ends meet. These people are not the squished middle; they are rapidly becoming the squeezed bottom."

The Cuts Watch Cymru coalition, a group of poverty charities based in Wales, published their study Wales on the Edge last month, revealing one in four people in Wales were set to be affected by cuts to the welfare system. This includes 40,000 people receiving housing benefit, 750,000 on job seeker's allowance and 1.2 million older people who receive a winter fuel allowance.

Mr Morgan said: "One thing I would like to see the Chancellor do is pledge there will be no further increase on fuel duty in any circumstances."

The confederation of British Industy note relative prosperity in Wales has fallen over the past 10 years to 74 per cent of the UK average.