BRITISH workers face two "lost decades" without a real terms pay rise, according to the respected economic think-tank, the Institute for Fiscal Studies.
In a bleak assessment of Chancellor Philip Hammond’s Budget, the IFS suggested it showed Brexit uncertainty and the loss of productivity could put average wages nearly £1,400 lower in 2021 than forecast in March 2016; lower in real terms than at the time of the financial crash in 2008.
"We are in danger of losing not just one but getting on for two decades of earnings growth," declared Paul Johnson, the think-tank’s director.
The IFS also said:
*Britain's national debt might not return to pre-financial crisis levels until "well past the 2060s";
*the £25 billion Budget spending spree did not mark the end of the "age of austerity" as public services outside the NHS still faced seven per cent cuts in day-to-day spending over the next five years and
*"grim" official forecasts from the Office for Budget Responsibility implied that GDP per head would be 3.5 per cent lower in 2021 than was forecast less than two years ago, equating to a £65bn hit to the economy.
The decision by the UK Government’s independent forecaster to downgrade projected annual productivity growth from 1.7 per cent to one per cent was "as likely to be too optimistic as to be too pessimistic", claimed Mr Johnson.
The UK is now growing more slowly than all other advanced economies and projected to experience growth "well behind" all the other G7 countries over the coming years with the OBR suggesting it will not top 1.6 per cent for the next five years.
"It really is time to start forgetting that for decades anything less than two per cent was considered seriously disappointing," said the IFS chief.
"The sorts of modest growth rates currently expected imply that, if we were to maintain the deficit at the just over one per cent of national income projected for the early 2020s, it would take us until well past the 2060s for debt to fall to its pre-crisis levels of 40 per cent of national income. That assumes no recessions for the next half century," he added.
The gloomy IFS assessment came as another think-tank, the Resolution Foundation, warned that living standards could face their biggest squeeze since records began in the 1950s as productivity growth was set to be the worst since the early 1800s
The Foundation said the "truly catastrophic" cuts to the OBR forecasts for growth suggested the economy would be £42bn smaller in 2022 than it had been expected in March.
Mr Hammond dismissed suggestions that the growth forecasts showed the UK was now the "sick man of Europe", declaring: "No, not at all. UK economy is fundamentally strong.”
Referring to the grim predictions of the economic forecasters, he added: “The challenge for us now as a nation is to prove them wrong. The challenge for us is to deliver that higher productivity that will feed through into higher economic growth."
But, John McDonnell, his Labour Shadow, said the IFS analysis "exposed the appalling failure of seven years of this Government's austerity economics and its grim consequences for working people".
Kirsty Blackman for the SNP said: “With families now facing the longest period of falling living standards since records began and plans for an extreme Tory Brexit set to make things even worse, it is vital that the UK Government finally takes meaningful action to boost household incomes and stimulate economic growth.”
Meanwhile, Theresa May made clear Mr Hammond's job was safe after what she termed a "very good" Budget.
The Prime Minister praised the Chancellor during a visit to Leeds following reports in recent weeks that she might sack him in a Cabinet reshuffle.
Asked if Mr Hammond's job was safe, Mrs May laughed and said: "Yes. The Chancellor did a very good job yesterday."
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