British workers could face not seeing any wages growth for the next two decades, the Institute of Fiscal Studies has warned.
The depressing forecast was made in the IFS’s bleak assessment of Philip Hammond’s Budget.
The national debt may also not return to pre-financial crisis levels until ‘well past the 2060s’ and the economy’s growth rate is lagging behind other countries.
Yesterday’s Budget, despite the £25 billion giveaways, did not mark the end of the ‘age of austerity’ said as public services outside the NHS still face 7% cuts in day-to-day spending over the next five years.
The Office for Budget Responsibility also projected GDP per head will be 3.5% lower in 2021 than was forecast less than two years ago, which is a £65 billion hit to the economy.
IFS director Paul Johnson said: ‘We are in danger of losing not just one but getting on for two decades of earnings growth.’
And Mr Johnson explained the OBR’s decision to downgrade projected annual productivity growth from 1.7% to 1% was ‘as likely to be too optimistic as to be too pessimistic.’
He added: ‘It really is time to start forgetting that for decades anything less than 2% was considered seriously disappointing.
‘The sorts of modest growth rates currently expected imply that, if we were to maintain the deficit at the just over 1% of national income projected for the early 2020s, it would take us until well past the 2060s for debt to fall to its pre-crisis levels of 40% of national income.’
‘That assumes no recessions for the next half century.’
Today the Prime Minister Theresa May described the Budget as ‘very good’ and when asked if the Chancellor’s job was safe said: ‘Yes. The Chancellor did a very good job yesterday.’