Wages will be stuck in World War II-style rut.
Byline: TORCUIL CRICHTON
ORDINARY people will see the smallest rise in their wages for more than 100 years under this Tory Government, economic experts have warned.
Workers face the "dreadful" prospect of more than 10 years without any real growth in their earnings as the UK faces the reality of Brexit.
The Institute for Fiscal Studies said that the country was in line for "an additional dollop of austerity" in the worst decade for wages since World War II.
The dire warning from the respected think tank came after Chancellor Philip Hammond admitted in his Autumn Statement that he has given up hope of eliminating the deficit by the end of this Parliament.
Paul Johnson, director of the IFS, said projections from the independent Office for Budget Responsibility suggested that real wages will remain below pre-recession 2008 levels until 2021 - the longest period since World War II.
He said: "One can't stress enough how dreadful that is - more than a decade without real earnings growth. We have not seen a period like it in the last 70 years."
The IFS analysis also revealed the generation gap in living standards. Younger workers have seen their real earnings plummet seven per cent since the financial crisis while pensioners have seen theirs increase by 11 per cent.
Hammond dumped his predecessor's plans to balance the budget by 2019-2020 in the wake of the Brexit vote and instead favours Labour's borrowing plans.
Johnson said: "The new fiscal plans aren't Osborne's, they're Balls'."
Research by another thinktank, the Resolution Foundation, said a combination of higher inflation, lower income growth and cuts to welfare mean real-terms earnings will go up by just 0.2 per cent in this Parliament. That is compared to 0.5 per cent under the Coalition government.
It means the current decade is set to see the smallest rise in workers' pay for more than 100 years. The lowest third of earners will see their real incomes fall in this Parliament.
But former Tory Cabinet Minister Iain Duncan Smith, a Leave campaigner, called the analysis "another utter doom-and-gloom scenario" by an organisation "that hasn't got anything right".
He added: "The key thing is that the OBR have been wrong in every single forecast they have made so far - on the deficit, on growth, on jobs they've pretty much been wrong on everything."
Shadow chancellor John McDonnell called on the Government to be open about their Brexit plans.
He said: "We can't do these negotiations without openness and transparency.
"People need to know where the Government are going and how they're going to get there.
"At least then you stabilise things and people will be able to settle down into serious negotiations and we'll get the best deal."
BORROWER Philip Hammond
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|Publication:||Daily Record (Glasgow, Scotland)|
|Date:||Nov 25, 2016|
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