“We have certainly not seen a period remotely like it in the last 70 years”: Think tank’s dire warning on wage growth
The director of one of the UK's most respected think tanks has issued a dire forecast about UK wage growth, warning workers are in the middle of more than a decade of stagnant wages.
In a highly emotive release, Paul Johnson, director of the Institute for Fiscal Studies (IFS), said its projections suggested real wages will, "remarkably", still be below their 2008 levels by 2021 – "a dreadful situation".
"We have certainly not seen a period remotely like it in the last 70 years," he added.
Downing Street officials pushed back on the grim predictions, saying that the IFS was looking at gross salary figures, rather than net income, which focuses on the final position of workers.
Net income includes earnings, benefits and pensions, as well as the subtractions of tax and national insurance.
A spokesman for the Prime Minister told journalists that so-called real household disposable income will rise by 2.8 per cent by 2021.
Autumn Statement
On yesterday's Autumn Statement, the IFS welcomed the lack of "rabbits from the hat" and chancellor Philip Hammond's decision to make it the final Autumn Statement.
But it was also unforgiving in pointing out flaws in government policy.
Johnson said Philip Hammond's tax cuts "pale into insignificance" compared to the hit on living standards that is now forecast – and added that Hammond will need more austerity in the next Parliament if he is to hit targets.
Despite commentators predicting the end of austerity, Johnson said the government will "still require an additional dollop of austerity on top of the full decade's worth we'll have had by then".
"Completely ludicrous"
The rollout of Universal Credit by the government was also slammed as "completely ludicrous", according to Johnson.
"This is not how to design and introduce the biggest reform to our welfare system in decades," he said.
On the new spending plans, the IFS director highlighted similarities between the Conservatives and the former leadership of Labour. He said that "the new fiscal plans aren't Osborne's, they are Balls'."