Published: Fri, November 25, 2016
Economy | By Melissa Porter

Think-tank warns of 'dreadful' prospects for United Kingdom wages

In its review of Chancellor of the Exchequer Philip Hammond's Autumn Statement and the release of growth and borrowing projections from the Office for Budget Responsibility (OBR), the Institute of Fiscal Studies (IFS) said British workers faced the "dreadful" prospect of no real-terms wage growth for a more than a decade.

The director of one of the UK's most respected think tanks has issued a dire forecast about United Kingdom wage growth, warning workers are in the middle of more than a decade of stagnant wages.

Mr Hammond said there was an urgent need to steel the country for hard 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.

Strikingly, Mr Johnson said the OBR forecasts - ridiculed as "doom and gloom" by pro-Brexit Tory MPs - were "noticeably more upbeat" than those of other experts, including the Bank of England.

The IFS said that Mr Hammond had adopted new fiscal rules and had abandoned plans by his predecessor, George Osborne, to return the public finances to a surplus by 2020.

The shift in forecast since March means real GDP per household is more than £1,000 lower in 2021 than expected. "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", he said.

"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'll have had by then".

"Since 2010 we've stabilised the economy and acted to help families struggling to get by".

But the Chancellor chose to prioritise "jam tomorrow" in the form of greater investment rather than "jam today" for the "just-about managing" (JAMs) or public service, Mr Johnson added.

Britain's new budget forecasts run until 2021, during which period Prime Minister Theresa May plans to withdraw Britain from the European Union following June's referendum.

Measures unveiled on Wednesday "pale into insignificance" compared with benefit and tax credit cuts announced by Mr Osborne a year ago. "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". And he said the way in which rises are repeatedly pencilled in only to be cancelled or deferred was "turning into a really big problem both for the Treasury and for our approach to the taxation of motoring".

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