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UK incomes to fall 7.4% in three years

The independent Institute for Fiscal Studies (IFS) says George Osborne’s economic plans will mean a sharp drop in household income.UK incomes to fall 7.4% in three yearsThe think tank said real household income would fall by an average of 7.4% between 2009-10 and 2012-13.

The IFS said that following last week’s Autumn Statement by Chancellor George Osborne, the median average income was set to stagnate.

It expected it to be no higher in real terms in 2015-16 than in 2002-03.

The IFS said it was running out of words of sufficient strength to describe the current economic climate and the chancellor’s plans.

He said that Mr Osborne’s statement on Tuesday bore many of the hallmarks of his predecessor Gordon Brown’s Budgets and pre-Budget reports.

“Downward revisions in the outlook for tax revenues, fiscal rules expected to be met by the merest whisker, investment spending plans being cumulated over several years, a complex array of small policies aimed at promoting growth, fiddling with tax credits, backing away from pre-announced increases to fuel duties.

“Mr Osborne’s second Autumn Statement had more in common with some of Mr Brown’s Budgets and pre-Budget reports than perhaps either of them would care to admit.”

The coalition government broke with tradition and gave the job of forecasting the economy to the independent Office for Budget Responsibility (OBR).

The OBR revised down its growth forecasts for the next few years, meaning Mr Osborne must make far deeper cuts to public spending to meet his target of cutting the deficit.

Mr Johnson said: “None of us should have been too happy to hear what the OBR had to say. The consequences for all of our living standards are just as profound as they are for Mr Osborne and his fiscal rules.”

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