The UK is in the midst of the worst decade for pay growth since the Napoleonic wars two centuries ago, according to the Resolution Foundation.
In a grim assessment of the new budget forecasts, the thinktank said families would miss out on £12,000 of pay growth by 2020, the worst decade for 210 years.
Workers will be hit with falling real pay, where inflation exceeds wage growth, in the coming months, Resolution said. Real average earnings are only expected to return to their pre-crisis peak by the end of 2022.
Torsten Bell, the director of the Resolution Foundation, said: “The big picture from yesterday’s budget is that the big squeezes on both the public and family finances have been prolonged well into the 2020s.
“While the Office for Budget Responsibility at least delivered some good news on borrowing, the family finances picture has actually deteriorated since the autumn statement. 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.
Bell said that some households would 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.”
Resolution calculates that a single person working full time on the minimum wage – earning £13,150 – will be £380 worse off by 2020. A dual-earning couple with two children and combined earnings of £29,020 will be £360 a year worse off by 2020.