Philip Hammond’s Autumn Statement will do nothing to prevent the “dreadful” problem of real wages still remaining below 2008 levels in 2021, the Institute of Fiscal Studies (IFS) has concluded.
In his analysis of the chancellor’s announcements yesterday, the director of the well regarded independent think-tank, Paul Johnson, said it was the worst situation for people’s pay since the end of the Second World War – or possibly longer.
And he warned “an additional dollop of austerity” was on its way if the government wanted to balance the books in the next parliament.
Johnson said Hammond’s decision to junk his predecessor’s plans to balance the budget by 2019-2020 in the wake of the Brexit vote and instead followed more closely the borrowing plans set out by Labour at the last election meant “it wouldn’t be far from the truth to say the new fiscal plans aren’t Osborne’s, they’re Balls’”.
“The outlook for living standards has deteriorated rather sharply since March,” he said.
“Overall real average earnings are forecast to rise by less than 5% between now and 2012. That means they will be 3.7% lower in 20102 than was projected in March. To put it another way around, half of the wage growth projected for the next five years back in March is not now projected to happen,” Johnson said.
“On these projections real wages will, remarkably, still be below their 2008 levels in 2021.”
The economist added: “One cannot stress 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.”
Also today, a separate think-tank, the Resolution Foundation, predicted incomes will rise at less than half the rate they did in the last parliament over the next five years.
Hammond yesterday confirmed he was abandoning plans to achieve a budget surplus by the end of the decade after revealing the country is set to take a hit of almost £60 billion over the coming five years as a result of the referendum vote to leave the European Union.
Article source: http://www.huffingtonpost.co.uk/2016/11/24/autumn-statement-2016-analysis-shows-dreadful-outlook-for-british-living-standards_n_13200752.html?utm_hp_ref=uk-politics&ir=UK+Politics