IFS lost for words over economy

IFS lost for words over economy

The Independent Institute for Fiscal Studies (IFS) has warned that the income of UK households is likely to fall 7.4 per cent in three years and Britons will be no better off in 2016 than they were in 2002.

The comment followed analysis of the Chancellor’s Autumn Statement yesterday.

The IFS expects household income, after inflation, to fall by an average of 7.4 per cent between 2009-10 and 2012-13.

The plans outlined by Mr Osborne left the IFS unable to find strong-enough terms to describe them.

At a press conference, Paul Johnson, the IFS’s director said: ‘We are running out of superlatives to describe just how extraordinary are some of these changes’.

A 7.4 per cent fall in average household income would be the second worst on record, beaten only in the recession of the mid-Seventies.

Following Mr Osborne’s announcement that the Government’s austerity programme will be extended beyond the next election, the IFS now estimates that public spending will fall by 16.2 per cent after inflation, over seven years.

New measures to curb spending include a 1 per cent cap on public sector pay rises for the next two years, no increase in tax credits and accelerating a planned increase in the state pension age to 67.

Mr Osborne is attending a meeting in Brussels today over the eurozone sovereign debt crisis.

A report by Reuters has revealed that Britain would accept a change to the European Union treaty in order to help safeguard the eurozone.

Although Britain is not a member of the eurozone, any changes to the Lisbon Treaty may have to be signed by all of the EU’s 27 members.

There was concern that the UK could hold up changes to the treaty, using it as a bargaining tool to regain some powers it has already ceded to the EU, over issues such as the working time directive.

Proposed changes to the Lisbon Treaty are expected to include greater euro zone integration.

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