BRITISH families will continue to feel the effects of the “great recession” of 2008-2009 for up to a decade, according to the Institute for Fiscal Studies (IFS), with living standards declining by more than 10 per cent over the next three years.
The respected independent economic forecaster says the impact of the financial crisis and slump is “only just beginning to be felt”.
“The decline in average living standards looks set to continue until at least 2013-14,” the IFS said, adding that the financial prospects for families will not recover for much of the next decade.
It predicts that typical household income will fall by 3.5 per cent in real terms in the year to April, the steepest drop since 1981.
“Much of the impact of the Great Recession on UK living standards was not felt until after the economy had stopped contracting, but that the pain was most definitely delayed rather than avoided,” the IFS said.
The IFS said Gordon Brown had delayed the impact of the recession with an “unusually generous” stimulus but that he increased the deficit to do so and the current government must now reduce it, leaving it little room to offset falling living standards by cutting taxes.