Forget post-election tax cuts, we're stuck in a lost decade, says IFS

‘Britain stuck in a debt trap and a lost decade for living standards’

- Nicholas Cecil

BRITAIN is in the grip of a “lost decade” on living standards with continuing financial “pain” for millions of households, leading economists warned today.

The Institute for Fiscal Studies also stressed that the country was caught in a “trap” of huge debt, large interest payments and sluggish growth which meant “there is no money left post-election for additional spending or tax cuts”.

The grim forecasts contrasted sharply with the upbeat Budget delivered by Jeremy Hunt yesterday as he seized on a slightly more positive short-term economic outlook for the country compared with last autumn.

Real household disposable income per person, a measure of real living standards, is expected to fall by a cumulative 5.7 per cent over the two financial years 2022-23 and 2023-24, according to the Office for Budget Responsibility. IFS director Paul Johnson said: “The OBR may be relatively optimistic about the medium term, but it still thinks these will be the worst two years on record for household incomes. Its projections suggest that real household disposable incomes will be no higher in 2027 than they were in 2019, and barely higher than in 2017 — a lost decade for living standards.”

In its Budget analysis, the IFS also: