‘Outlook for family finances worse’ – think tank

DISPOSABLE incomes are set to be £540 lower by 2023 than forecast in March and pay rates will not return to levels seen before the financial crash until the middle of the next decade, according to the Resolution Foundation.

The living standards think tank said annual pay was forecast to be £1,000 lower and consequently the UK faced a 17-year downturn before wages return to 2008 levels.

The think tank warned that Chancellor Philip Hammond has not taken sufficient action to ease the living standards squeeze, with welfare cuts over the coming years set to heap pressure on low-income families.

Resolution Foundation director Torsten Bell said: “The Chancellor has been handed a massive downgrade to expectations for how fast Britain’s economy can grow, knocking a full quarter off the growth we can expect over the next five years.

“While the result for the public finances is grim, the Chancellor has chosen to take the extra borrowing on the chin and indeed to borrow more, including welcome new action on housing. The outlook for family finances, however, is worse.

“Our incomes are expected to be £540 lower than previously thought and pay is not set to return to precrisis levels until the middle of the next decade. The Chancellor has made the wrong call to press ahead with a damaging freeze on benefits.”