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Friday, November 25, 2016

What Brexit will cost us

As we digest the contents of this week's autumn statement and the economic forecasts of the Office for Budget Responsibility, it is worth reflecting on how exactly the decision to leave the European Union is going to hit ordinary working people.

The Western Mail reports on an analysis by the Institute for Fiscal Studies which concludes that workers face the “dreadful” prospect of real wages still lagging behind 2008 levels in 2021. Paul Johnson, speaking on behalf of the IFS told the paper:

“Overall real average earnings are forecast to rise by less than 5% between now and 2021.

"To put it another way around half of the wage growth projected for the next five years back in March is not now projected to happen.

“On these projections real wages will, remarkably, still be below their 2008 levels in 2021.

"One cannot stress enough how dreadful that is – more than a decade without real earnings growth.

“We have certainly not seen a period remotely like it in the last 70 years.”

He further warned that the “real value” of working age benefits such as the Jobseeker’s Allowance will “fall by 7.7% rather than 6.5%”.

The Resolution Foundation have also waded in. They expect a hit to wages, stating in their Autumn Statement analysis: “Average earnings are now forecast to be £830 a year lower than expected in 2020, with this decade now set to be the weakest one for wage growth since the 1900s.

"Growth of just 1.6% between 2010 and 2020 compares with an increase of 12.7% in the 2000s and over 20% in every other decade since the 1920s.”

The foundation warns that “real weekly earnings are forecast to grow by just 1.6% over the decade, compared to 12.7% in the 2000s and over 20% in every other decade since the 1920s”.

It further warns: “While top earners were hit the hardest following the financial crisis, the big difference looking forward is that the biggest losers are lower income families, with the entire bottom third of the income distribution set to see incomes fall in the years ahead.”

Brexit then is going to hit the lowest earners and those on benefits the hardest. Meanwhile Nigel Farage, who was instrumental in getting us into this mess, is set to go on a tour of the USA, where he could earn half a million dollars for 20 lectures. Nice work if you can get it.
If people get benefit out of being in the media through their work as an MP or MEP then they should have to refund their excessive earnings, over and above the normal taxation, to the government to help to subsidise the costs of running parliament. That might bring in reasonable amount of cash!
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