Wages will be 'dreadful' for more than a decade, warns respected think tank
UK workers face a "dreadful" decade with no real wage growth and yet more austerity, a respected think-tank has warned.
The Institute for Fiscal Studies said forecasts published with the Autumn Statement indicate real wages will remain below pre-recession levels until 2021 - the longest period of stagnation since the Second World War.
The body also said the UK is in line for "an additional dollop of austerity" in the 2020s, after Chancellor Philip Hammond admitted he has given up on eliminating the deficit by the end of this parliament.
Mr Hammond said there was an urgent need to steel the country for difficult times ahead, as the Office for Budget Responsibility published its bleak forecasts on Wednesday, highlighting lower GDP, trade and wage growth and higher government borrowing.
On the poor wage growth, IFS director Paul Johnson said: "One cannot stress enough how dreadful that is - more than a decade without real earnings growth. We have certainly not seen a period remotely like it in the last 70 years."
Mr Johnson said the OBR’s forecasts, which predicted a £122bn budget black-hole, could have been even worse, adding: "Even so, the outlook for living standards and for the public finances has deteriorated pretty sharply over the last nine months."
He said Mr Hammond's promise to balance the books "as soon as possible" in the next parliament up to 2025 was "rather woolly".
Mr Johnson went on: "Given uncertain times, a degree of woolliness is probably sensible. It wouldn't take a huge downgrade in trend growth forecasts of GDP in 2020 for us to miss the target.
"And getting to balance in the next parliament will still require an additional dollop of austerity on top of the full decade's worth we will have had by then."
Labour’s shadow Chancellor John McDonnell said the "lost decade" is a "damning indictment of the total, abject failure of the Tories’ economic policy".
He added: "The so-called ‘long-term economic plan’ has meant long-term decline in living standards for working people even as the super-rich and the big corporations are given large tax giveaways.
"Chancellor Philip Hammond promised action in the Autumn Statement for those ‘just about managing’. Instead he has betrayed them by continuing to slash in-work benefits, failing to raise the ‘National Living Wage’ to the level promised, failing to deliver more funding for our NHS and social care and now he’s threatening pensioners with removing the ‘triple lock’."
Liberal Democrat Treasury spokesman Susan Kramer said: "The fall in national income will means we are all going to be £1000 year poorer thanks to Brexit.
"Meanwhile our public services will be worse off as well thanks to a Brexit black hole over the next 5 years, meaning the IFS now say we cannot expect any new money for our cash strapped NHS this parliament."
Independent News Service