The UK Chancellor of the Exchequer, Philip Hammond, outlined his Autumn Atatement, in which he made references to difficult times ahead for the UK economy.
Apparent promises that were made under former Prime Minister David Cameron to try and "balance the books" by 2020, have gone out the window, with borrowing set to balloon over the next 12 months.
OBR forecast real average earnings in 2021: 3.6% lower than expected in March; still below pre-recession peak 13 yrs later #AutumnStatement pic.twitter.com/2vxJvmvT8z
— IFS (@TheIFS) 23 November 2016
Hammond did however, promise some palliative measures to the gloomy economic outlook, including a slowdown of benefit cuts, a small increase in the minimum wage and a new housing program in England.
Yet critics believe the lives of British people will become much harder over the coming year.
The Office for Budget Responsibility (OBR), which provides independent and authoritative analysis of the UK's public finances, released a statement shortly after the Chancellor gave his review.
In a statement, OBR said that the government was no longer on course to balance the budget during the current parliament and has formally dropped this ambition in a significant loosening of its fiscal targets.
"Public sector net borrowing is now expected to fall more slowly than we forecast in March, primarily reflecting weak tax receipts, so far this year and a more subdued outlook for economic growth, as the UK negotiates a new relationship with the European Union.
"The UK government is confronted by a near-term economic slowdown and a structural deterioration in the public finances," the OBR statement read.
The dire forecasts of the OBR are dismissed by some as too pessimistic. I think the opposite, given they assume a soft & bump-free Brexit.
— Keith Burge (@carryonkeith) November 24, 2016
"Any likely Brexit outcome would lead to lower trade flows, lower investment and lower net inward migration than we would otherwise have seen, and hence lower potential output. In time, the performance of the economy will also be affected by future choices that the Government makes about regulatory and other policies that are currently determined at the European level. These could move in either a growth-enhancing or a growth-impeding direction."
This is not the only bad news, the OBR, which has already tried to calculate the impact of the EU referendum, has said in its statement that the vote will cost on average US$72billion over the next five years. The reason being is that lower migration and weaker production will hit the government reverences.
Good news: OBR says there’ll be 500,000 new jobs.
— David Schneider (@davidschneider) November 24, 2016
Bad news: they’ll all be trade negotiators.#AutumnStatement
The estimated cost of Brexit has shocked the City of London, after the predicted bill of US$123 billion turned out to be even higher — a total of US$151 billion between economic losses and borrowing costs.
This negative outlook has now been coupled by the latest report from the Institute for Fiscal Studies (IFS), which have said as a result of the Chancellor's Autumn Statement, the poor will suffer the most and the UK will see the worst living standards since the 1920s.
Paul Johnson, director of the IFS, said that the outlook for living standards has deteriorated sharply since March.
"The OBR is forecasting both lower nominal wage growth as a result of lower productivity, and higher inflation resulting from the exchange rate depreciation. Overall real average earnings are forecast to rise by less than 5% between now and 2021. That means they will be 3.7% lower in 2021 than was projected in March. To put it another way around, half of the wage growth projected for the next five years back in March is not now projected to happen. On these projections real wages will, remarkably, still be below their 2008 levels in 2021.
"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," Mr. Johnson said in a recent interview.
The next decade, it seems, will be a hard one for the British people, according to several different forecasts.
