UK economy faces ‘longest fall in living standards in 60 years’
The UK is on course for its longest fall in living standards since records began over 60 years ago, the Resolution Foundation think tank has said.
Its post-Budget analysis says the squeeze on incomes is set to last longer than that which followed the post-2008 crash.
It says real disposable incomes are now set to fall for 19 successive quarters.
The growth downgrades puts the economy on course to be £42bn smaller in 2022 than previously expected, it says.
On Wednesday, the independent Office for Budget Responsibility (OBR) issued its latest forecast for the UK economy.
It cut its growth forecast sharply for 2017, from 2% to 1.5%, with growth for the next five years forecast to come in well under 2%.
The Resolution Foundation said that tax and benefit policies were set to put downward pressure on living standards and upward pressure on inequality, and would take an average of £715 away from the poorest third of households a year, while giving £185 to the richest third.
However, it welcomed the action taken by the government on Universal Credit. The chancellor announced a £1.5bn package to "address concerns" about the delivery of the benefit, and promised to scrap the initial seven-day waiting period for processing of claims.
One of the key issues holding back incomes is the slow pace of productivity growth, which was revised down by an average of 0.7% a year up to 2023.
Mr Hammond, has tried to address the productivity problem in this week's Budget by expanding the National Productivity Investment Fund (NPIF).
This was launched last year to provide additional investment in housing, infrastructure, and research and development. The Budget increases the size of the NPIF from £23bn to £31bn.
He also is increasing the Research and Development (R&D) Expenditure Credit, effectively tax relief for companies doing R&D.
Chancellor Phillip Hammond, who was under pressure from sections of his party in the run-up to Wednesday's speech, won praise for his Budget from Tory backbenchers.
MPs privately told the BBC it was "very solid" and had been "well received" while one said it contained "nothing too dangerous" and would pass intact.
The Resolution Foundation was critical of the plan abolish Stamp Duty on house purchases for many first-time buyers, saying the £3bn it would cost breaks down to a subsidy of £160,000 per extra home owner.
That, it says, means the chancellor could have simply bought people typically priced properties in over a quarter of local authorities or built around 140,000 homes.
Torsten Bell, director of the Resolution Foundation, said: "Faced with a grim economic backdrop, the Chancellor will see this Budget as a political success. But that would be cold comfort for Britain's families given the bleak outlook it paints for their living standards.
"Hopefully the OBR's forecasts will prove to be wrong because, while the first sentence of the Budget document reads 'the United Kingdom has a bright future', the brutal truth is: not on these forecasts it doesn't."