Britain’s economy has now experienced a “decade without growth” and lost income from the financial stagnation will never be recovered, according to an economic research institute.
The UK will experience weak GDP growth by historical standards and very disappointing wage increases over the next five years, the Institute for Fiscal Studies reported Thursday, citing new analysis by the Office for Budget Responsibility.
The analysis paints a bleak picture of the UK economy and a 700 million pound tax shortfall annually by 2020 because of Brexit’s impact.
“This remains the big story of the last decade – a decade without growth, a decade without precedent in the UK in modern times,” said Paul Johnson, director of the IFS.
The weakness of growth in GDP per person is the fundamental reason wages have been so weak for the past ten years, according to the OBR.
Britain is now facing its worst decade of real pay growth since the Napoleonic Wars about 210 year ago, according to the Resolution Foundation think tank, using the OBR’s latest wages projections.
The British economy was weaker in 2016 than previously estimated and there were signs that the UK referendum to leave the European Union will increasingly act as a brake on growth in 2017.
The Confederation for British Industry, one of Britain’s biggest business lobbies, warned last week that the UK would face a “Pandora’s box of economic consequences” if it exits the EU without a new trade deal in place.
There is broad consensus among economists that Brexit will have a prolonged effect of the British economy and will ultimately diminish output, jobs and wealth to some degree.