U.K. Faces Longest Fall in Living Standards Since Records Began

Britons were warned they are on course for the longest fall in living standards since records began 60 years ago after the U.K.’s fiscal watchdog took the ax to its outlook for economic growth.
In an analysis of the government’s latest budget and accompanying report by the Office for Budget Responsibility, the Resolution Foundation said on Thursday that the economy is set to be 42 billion pounds ($56 billion) smaller in 2022 than the OBR predicted in March.
It also calculated wages will not return to their pre-financial crisis levels of 2007 until at least 2025 once inflation is taken into account. Average annual pay is now projected to be 1,030 pounds lower in 2022 than the March forecasts and household disposable incomes will fall for an unprecedented 19 straight quarters between 2015 and 2020, according to Resolution.
That analysis underscores the challenge Chancellor of the Exchequer Philip Hammond faced on Wednesday when he released a budget that gave him little room to maneuver fiscally as Brexit looms. He was still able to generate some cash to abolish the tax on some housing purchases for first-time buyers and for the health service.
“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 would be cold comfort for Britain’s families given the bleak outlook it paints for their living standards.’’
The group also estimated that the OBR’s forecast showed on a 10-year rolling basis that productivity growth will fall to 0.1 percent by the end of 2017. That makes it the worst decade for productivity since 1812, when Napoleon invaded Russia.
Hammond acknowledged the problem in his Thursday post-Budget interviews. “The way to deliver higher real pay growth is to improve our productivity, there is no other solution,” he told the BBC.
“You can’t generate high wage growth unless you are being more productive and the way we do that is to invest in and encourage the most productive parts of our economy: The service sector, which is globally competitive, the high-tech businesses which are happening all over the U.K.”
U.K. Faces Longest Fall in Living Standards Since Records Began U.K. Faces Longest Fall in Living Standards Since Records Began Reviewed by Alexander Von Stern on 03:21:00 Rating: 5