Two new studies by the UK’s leading think-tanks paint a grim picture for Britain, as its living standards are expected to decline further, while the national debt is not expected to begin shrinking until the 2060s.
The post-budget analysis by the Institute for Fiscal Studies highlights that the average wages in Britain are expected to be be some £730 lower in 2022-23 than in 2007-08, if inflation is taken into consideration.
IFS Director Paul Johnson stated that Britain is “in danger of losing not just one but getting on two decades of earnings growth”, Evening Standard reports.
The UK’s average wage was £24,470 in 2007-08 in today’s currency, once inflation is taken into account, but following the financial crisis and its aftermath, they are expected to be just £23,640 in 2022-23.
If this trend continues, the gap between average earnings in 2121 and 2016 will constitute £1,400.
At the same time, he noted that the UK’s national debt is not expected to drop to pre-2008 levels over the next 50 years, despite the Chancellor of the Exchequer’s best efforts to reduce the deficit with tough austerity measures.
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“If we were to maintain the deficit at the just over 1% of the national income projected for the early 2020s, it would take us well past the 2060s for debt to fall to its pre-crisis levels of 40% of national income,” the IFS Director claimed.
That is of course, unless Britain would be hit by yet another economic crisis, further decreasing living standards and delaying the elimination of deficit, Johnson noted.
In a related study, the Resolution Foundation warned that the living standards in Britain are on track to suffer from the most considerable drop since the 1950s.
The study also found that overall productivity growth will plummet to 0.1 percent by the end of 2017, “making it the worst decade for productivity since Napoleon invaded Russia in 1812.”
“Faced with a grim economic backdrop, the Chancellor will see this budget as a political success,” said Torsten Bell, the Resolution Foundation’s director, but that will “be cold comfort for Britain’s families, given the bleak outlook it paints for their living standards.”
The studies come shortly after the budget speech by Chancellor Philip Hammond, which suggested the end of strict austerity measures by the Conservative government, which cut substantial funds from social services, including the National Health Service (NHS).
However, the IFS argued that the budget speech in fact reveals the continuation of the “age of austerity”.
Although Theresa May’s government allocated £25bn to the NHS, homebuilding and tech, other public services are expected to suffer from a seven percent cut in their daily spending over the next five years.