UK ‘faces two decades of lost wages growth’

BRITAIN faces almost two decades of lost earnings growth – while the national debt will not be under control for another 50 years, according to a bleak assessment yesterday.

The Institute for Fiscal Studies said it was ‘astonishing’ that average earnings would still be below their 2008 level, in real terms, in 2022.

And it said that the national debt would not fall to its pre-crisis levels of 40 per cent of national income until the 2060s.

The IFS based its projections on figures in Wednesday’s Budget. The economic forecaster’s director Paul Johnson said they made ‘grim reading’.

The think tank also said that measures in Philip Hammond’s Budget indicated the end of austerity was still a long way away.

It said the public sector outside the NHS was facing further deep cuts of 7 per cent in day-today spending over the next five years.

With nearly £12billion of welfare cuts still to work their way through the system and day-today public spending due to be 3.6 per cent lower in 2022-23 than it is now, ‘this is not the end of austerity, not by a long chalk’, said Mr Johnson.

The IFS said Britain’s national debt may not return to pre-financial crisis levels until ‘well past the 2060s’. In 2007-08, before the crisis, the public sector net debt was 35 per cent of national income – but it is now just over 86 per cent.

Average earnings in 2021 look set to be nearly £1,400 lower than forecast in March 2016 – lower in real terms than at the time of the financial crash in 2008. Mr Johnson said: ‘We are in danger of losing not just one but getting on for two decades of earnings growth.’

Responding to the IFS analysis, a government spokesman said: ‘The Budget set out the next steps in our plan to build an economy that is fit for the future.

‘We are increasing the National Living Wage, freezing fuel duty for the eighth year in a row and taking millions of people out of paying income tax altogether.’