Budget 2017: IFS boss says he will be DEAD before UK debt returns to pre-crash levels
2 min read
Britain's national debt will not return to its pre-crash level for another fifty years, the boss of a respected thinktank has declared.
Paul Johnson of the Institute for Fiscal Studies joked that he will be dead by the time it comes down to 40% of national income at some point in the 2060s.
Chancellor Philip Hammond revealed in the Budget yesterday that the Office for Budget Responsibility had massively downgraded its economic growth forecasts for the next five years.
That means borrowing is set to be £30bn higher in 2022 than previously thought - dashing Mr Hammond's hopes of reaching a Budget surplus during the next parliament.
At the IFS's traditional post-Budget briefing today, Mr Johnson said if growth continues as forecast and the deficit remains at just over 1% of national income it would take decades to get debt down.
“It would take us until well past the 2060s for debt to fall to pre-crisis levels of 40% of national income," he said. "That assumes no recessions for the next half century."
He added: “I’ll be dead.”
Elsewhere, Mr Johnson also said average earnings will be £800 lower in 2022 than they were in 2008.
He added that spending on public services was set to be 3.6% lower in 2022/23 than it is today.
GDP per person was set to be 3.5% smaller in 2021 than was forecast in March last year - effectively wiping £65bn off the economy.
He added: “Average earnings look like they will be nearly £1,400 a year lower than forecast back then, still below their 2008 levels.
"We are in danger of losing not just one but getting on for two decades of earnings growth."
Mr Johnson also insisted that austerity was not over “by a long chalk” since there was still nearly £12bn of welfare cuts to come down the line.
Elsewhere today, the Resolution Foundation said Britain was on course for the longest fall in living standards since records began 60 years ago due to the sluggish growth.
This morning the Chancellor said of the gloomy growth forecasts: "The challenge for us as a nation is to prove them wrong."
But Shadow Chancellor John McDonnell said Mr Hammond was “cut off from the real lives of people".
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