Britons told to brace for a decade of pain as household income will be worst on record, IFS warns

In the aftermath of the announcement on Wednesday, the IFS said the average British family’s disposable income would increase by just two per cent over the course of the 2020s.

The figure is the worst level of recorded growth in more than seven decades.

The bleak forecast would mean the country would fail to see growth surpass that of the 1950s.

Britain was still living under brutal post-war rationing measures at the time.

IFS director Helen Miller said: “This decade looks set to be the worst decade for growth in household incomes on record.

“No amount of temporary cost of living packages will fix that. We need a stronger economy.”

Ahead of his speech, Mr Healey insisted his budget would deliver “breathing space” for households and businesses across the country.

Speaking yesterday, the Chancellor said his announcement of £100 off energy bills for about 20 million households in England was an “important payment”.

He added: “Now, you can’t remove all the rises, you can’t remove all the pressures that people are facing.

“But my aim is to say, look where we can, we’ll act, we’ll give people a bit of breathing space and [we’re] doing that with this household energy payment.”

However, a former adviser to Andy Burnham described Mr Healey’s first Budget as a four out of 10.

Andy Haldane, a former chief economist at the Bank of England who advised Mr Burnham as Greater Manchester Mayor, delivered a withering verdict on the Chancellor’s maiden economic statement.

“John Healey plainly yesterday had sworn the Hippocratic Oath before he gave his speech,” Mr Haldane told the BBC.

“It was a do-no-harm Budget, and as best we can tell, most people shrugged: businesses, consumers, financial markets.

“And given its predecessors, maybe we should thank heavens for those small mercies.”

The Budget will leave Britain facing its highest tax burden since the Second World War, with Mr Healey reducing his fiscal headroom from £23billion to around £15billion following the economic impact of the conflict in the Middle East.

The Chancellor announced a £100 increase to the Warm Home Discount for families on benefits, while moving green levies off electricity bills and scrapping gas standing charges, saving the average household £27 a year.

Mr Healey also extended the fuel duty freeze and confirmed an eight per cent surcharge on banks, expected to raise around £2billion.

The National Living Wage and state pension will both rise by 3.9 per cent, while first-time buyers will be offered a new scheme allowing them to purchase a property with a 2.5 per cent deposit and a 20 per cent Government equity loan.

Pubs will benefit from an increase in business rates relief from 15 per cent to 35 per cent from April 2027, with the average pub expected to save more than £3,000.

Mr Healey also acknowledged a £4.7billion shortfall in the military investment plan.

However, the ex-Defence Secretary stopped short of setting a timetable for increasing spending to three per cent of GDP, with the decision deferred until the Autumn 2027 spending review.