Wages to remain stagnant for a decade, says IFS

Workers are facing the “dreadful” prospect of not experiencing any wage growth for more than a decade according to the Institute for Fiscal Studies.

The new forecasts from the independent office for Budget Responsibility (OBR) showed that the outlook for living standards “has deteriorated sharply since March”, according to the report.

The downgrade will mean national income will be £30bn lower than projected in March, equivalent to £1000 a year per household.

IFS director Paul John said that lower wage growth and higher inflation over the next five years will mean that workers will earn less in real wages in 2021 than they did in 2008.

"One cannot stress enough how dreadful that is - more than a decade without real earnings growth. We have certainly not seen a period remotely like it in the last 70 years," said Johnson.

The biggest impact on income in recent years has been felt by younger workers according to the IFS.

Fellow think tank Resolution Foundation said it would be low and middle income families “who feel the tightest squeeze” in a separate report.

"While top earners were hit the hardest following the financial crisis, the big difference looking forward is that the biggest losers are lower income families, with the entire bottom third of the income distribution set to see incomes fall in the years ahead," the Foundation said.

The OBR said the UK now faced £122bn more debt over the next five years with £59bn attributed to the Brexit vote.

Johnson also commented on how he was surprised that Hammond had not responded to calls for more investment in the NHS or Social care and said that “he won't be able to do that for much longer".