The British were warned that they are on track for the longest drop in living standards since records began 60 years ago after the UK fiscal agency took control of its prospect of economic growth.
In an badysis of the latest Budget and corresponding report from the Office for Budgetary Accountability, the Resolution Foundation said on Thursday that the economy will be 42 billion pounds ($ 56 billion) smaller by 2022 than that the OBR predicted in March.
He also calculated that salaries will not return to their prefinancial crisis levels of 2007 until at least 2025 once inflation is taken into account. The average annual salary is projected to be 1,030 pounds less in 2022 than March forecasts and household disposable income will fall for 19 consecutive consecutive quarters without precedent between 2015 and 2020, according to the Resolution.
The badysis was reinforced by the Fiscal Institute According to studies, the OBR forecasts implied that the average earnings would be almost 1,400 pounds lower in 2021 than expected before the 2016 Brexit referendum and still below its 2008 level .
"We are in danger of losing not just one but two decades of earnings growth," IFS director Paul Johnson told a news conference in London.
& # 39; Grim Backdrop & # 39;
The warnings underscore the challenge that Finance Minister Philip Hammond had on Wednesday when he published a budget that left little room for fiscal maneuvering as Brexit looms. OBR cut its growth forecasts as a result of weak productivity, and Hammond accumulated more pressure on the budget by pledging extra money for the health service and abolishing the tax on some homebuyer purchases for the first time.
"In a bleak economic context, the chancellor will see this budget as a political success," said Torsten Bell, director of the Resolution Foundation. "But that would be a cold consolation for British families given the grim outlook it paints for their living standards."
The group also estimated that the OBR forecast showed on a 10-year basis that productivity growth will fall to 0.1 percent by the end of 2017. That makes it the worst decade for productivity since 1812, when Napoleon invaded Russia.
Hammond acknowledged the problem in his post-budget interviews on Thursday. "The way to achieve greater real salary growth is to improve our productivity, there is no other solution," he told the BBC.
"You can not generate high wage growth unless we are more productive and the way we do that is to invest and encourage the most productive parts of our economy: the service sector, which is competitive globally, the high-tech companies that are happening across the UK "
Hammond disappointed millions of public sector workers with the hope that he could end seven years of wage restriction and lift the 1 percent limit on the wage increases in effect since 2013.
The Treasury is committed to providing extra money for nurses, but "given the spending restrictions, other public sector workers should not owe their encouragement in anticipation of an increase in the payment of inflation," or maybe even 1 percent, "said Johnson of the IFS.
– With the help of Robert Hutton