British workers could face a decade of wage stagnation

Fresh Brexit-related warning from UK think-tank...

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UK households are facing their worst period for earnings growth since the war after a sharp downgrade in the economic outlook, a leading think-tank has warned.

The Institute for Fiscal Studies (IFS) said workers were facing the "dreadful" prospect of more than a decade without real terms wage growth, in a briefing a day after the Chancellor's Autumn Statement.

It said new forecasts produced by the independent Office for Budget Responsibility (OBR) showed that the outlook for living standards "has deteriorated rather sharply since March".

The downgrade will mean that the UK's national income £30bn (€34.4bn) lower than it had projected in March - equivalent to £1,000 (€1179.56) a year per household. 

IFS director Paul Johnson said that lower wage growth and higher inflation over the next five years meant that real wages would still be below their 2008 level in 2021.

Johnson said: "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."

In separate analysis the Resolution Foundation said that it would be low and middle income families "who feel the tightest squeeze".

The IFS assessment comes after the OBR said the UK now faced £122bn in extra borrowing over the next five years with £59bn attributed to the Brexit vote.

Leading pro-Brexit MPs have attacked the economic outlook as too gloomy but the IFS said it was more optimistic than other forecasters including the Bank of England. 

Additional reporting by IRN