United Kingdom debt 'will not fall to pre-2008 levels for 50 years'


Workers are also facing not one but two "lost decades" of earnings growth as the national debt continues to soar, the Institute for Fiscal Studies (IFS) predicted in a bleak assessment of the Chancellor's Autumn Statement.

Paul Johnson, the IFS's director, said the "pretty grim" outlook suggests average earnings are set to be almost £1,400 less in 2021 than forecast in March 2016 and lower in real terms than before the 2008 financial crisis.

PHILIP Hammond hit back at gloomy forecasts for 20 years of economic misery yesterday - and called on the country to prove the doomsayers wrong.

It said that excluding health, public services still face 6 per cent cuts, and said that there will be at least another year of austerity.

"Grim" official forecasts from the Office for Budget Responsibility imply that GDP per head will be 3.5 per cent lower in 2021 than was forecast less than two years ago, equating to a £65 billion hit to the economy, he said.

Reviewing the Budget yesterday, the economic think-tank claimed Britain's debt mountain will not fall below pre-crisis levels for almost 45 years.

Paul Johnson, the IFS director, said: "We are in danger of losing not just one but getting on for two decades of earnings growth". Their view then, accepted by government, was that the Brexit vote would result in a £15 billion-a-year deterioration in the public finances. 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 said.

Ministers have defended Philip Hammond for his stamp duty announcement in Wednesday's Budget

United Kingdom economic growth (GDP) since 1982.

"It really is time to start forgetting that for decades anything less than 2% was considered seriously disappointing", said Mr Johnson.

Paul Johnson of the Institute for Fiscal Studies said Brexit was not to blame for growth forecasts being revised down in Wednesday's United Kingdom budget.

The public debt forecasts also assume there are no recessions in the next half century - a highly implausible scenario - meaning the actual return to pre-crisis levels may be even longer.

Today the Prime Minister Theresa May described the Budget as "very good" and when asked if the Chancellor's job was safe said: 'Yes.

Mr Hammond's Budget was praised by Mrs May.