The IFS forecast should be taken with a pinch of salt

Under Robert Chote, the Institute of Fiscal Studies (IFS) was meticulous about positioning itself as politically neutral. Since he left to run the Office of Budgetary Responsibility (OBR) and Paul Johnson took over it has been far more relaxed about its political position. Increasingly it comes across as yet another centre-left think tank attacking the government’s ‘austerity’ policies.

Today, the IFS put out a projection of wage growth over the next four years, taking into account yesterday’s autumn statement. The eye-catching headline is that real earnings will be lower in 2020/21 than they were in 2007/08, at the beginning of the financial crash. Johnson claimed that: “One cannot stress 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.”