Budget 2017: Squeeze on family finances 'extended until 2020s'

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The squeeze on both family and public finances have been prolonged until well into the 2020s, according to a think tank’s analysis of the Budget.

The UK is on course for an unprecedented 15 years of spending cuts and lost pay growth the Resolution Foundation said.

It will leave the poorest third of households worse off than in the years after the financial crisis, it said.

The Treasury says it has helped poorer workers by increasing the Living Wage.

The Budget watchdog – the Office for Budget Responsibility – forecast that government borrowing for 2016-17 would be £51.7bn – a fall of £16.4bn from its November forecast and £4bn lower than the 2016 Budget estimate.

“While the OBR at least delivered some good news on borrowing, the family finances picture has actually deteriorated since the autumn,” said Torsten Bell, director of the Resolution Foundation.

“Britain is set for a return to falling real pay later this year, with this decade now set to be the worst for pay growth since the Napoleonic wars.

“Some households will feel the pinch more than others. The combination of weak pay growth and over £12bn of benefit cuts means that for the poorest third of households this parliament is actually set to be worse than the years following the financial crisis,” he said.

According to its analysis of the Budget, the Resolution Foundation, which says its goal is to improve lives for people on low and modest incomes, predicts that average earnings are only set to return to their pre-crisis peak by the end of 2022.

On public finances, it said that despite the downward revision to borrowing forecasts, the UK was only on course to meet the government’s objective of eliminating the deficit in 2025.

If it does so, that would be 15 years after the previous chancellor, George Osborne, had started implementing spending cuts and raising taxes.

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