Britain faces a period of falling wages and lower living standards following the Budget downgrade of the economic forecasts, a leading economic think-tank has warned.
The Institute for Fiscal Studies (IFS) said the revisions set out by George Osborne in the Commons had implications for the wider economy as well as the public finances.
The Chancellor was forced to admit that he would need tens of billions more borrowing after the Office for Budget Responsibility said growth would be lower than expected.
IFS director Paul Johnson said: "That loss largely arises from changes in assumptions about future productivity growth over the rest of the parliament.
"If the OBR is right about that, we should all be worried. This will lead to lower wages and living standards, not just lower tax revenues for the Treasury."