Britain’s national debt may not return to pre-financial crisis levels until “well past the 2060s”, on the basis of projections released with Wednesday’s Budget, a respected economic thinktank has warned.

And workers are facing two “lost decades” without earnings growth, the Institute for Fiscal Studies predicted in a bleak assessment of Chancellor Philip Hammond’s Budget.

Despite a £25 billion giveaway, the Budget did not mark the end of austerity, said the IFS, pointing out that public services outside the NHS still face 7% cuts in day-to-day spending over the next five years.

“Yet this is not the end of ‘austerity’. Not by a long chalk. There are still nearly £12 billion of welfare cuts to work through the system, while day-to-day public service spending is still due to be 3.6% lower in 2022–23 than it is today,” said IFS director Paul Johnson.

IFS #Budget2017 analysis. Yesterday’s Budget was more about the OBR’s forecasts than it was the Chancellor’s policy decisions. The forecasts for productivity, earnings and economic growth make pretty grim reading. https://t.co/ifNr9iQbv8 pic.twitter.com/8mgCi2n3yW

November 23, 2017
“Excluding health the cut for the rest of public services is over 6% – to keep this spending constant in per capita terms spending would need to be £13 billion higher in 2022-23 than currently planned.

“The figures published yesterday also imply yet one more year of spending restraint. As the years go by the end of austerity keeps slipping out of view,” Johnson added.

 “Grim” official forecasts from the Office for Budget Responsibility imply that GDP per head will be 3.5% lower in 2021 than was forecast less than two years ago, equating to a £65 billion hit to the economy, Johnson said.

And average earnings in 2021 look set to be nearly £1,400 lower than forecast in March 2016 – lower in real terms than at the time of the financial crash in 2008.

“We are in danger of losing not just one but getting on for two decades of earnings growth,” said Johnson.