WORKING people will face even lower wages and living standards because George Osborne lost billions “down the back of the sofa,” the Institute for Fiscal Studies (IFS) said yesterday.

IFS director Paul Johnson predicted the Chancellor would pick the pocket of ordinary people to plug his £56 billion Budget black hole.

Austerity will also drag on into the next decade because the economy is tanking under the Tories, he said.

The warning from one of Britain’s top economists came after the Office for Budget Responsibility (OBR) downgraded its growth forecast for the next five years on Wednesday.

It was a complete reversal of the verdict given by the Treasury watchdog before the Autumn Statement when it anticipated a £27bn improvement in public finances for which it was criticised by economists.

Blinkered Mr Osborne is sticking by his austerity ideology and insists he will deliver a Budget surplus by 2021.

Presenting the IFS budget analysis in London, Mr Johnson warned it would require even more pain for working people who are already earning £40 a week less than before the financial crash.

In a scathing assessment of the Budget, he said: “The £27bn he found down the back sofa in November turned into £56bn that the sofa ate up yesterday.

“If the OBR is right then we should all be worried. Lower productivity growth means lower earnings and living standards, not just lower tax revenues for the Treasury.

“And earnings and living standards are probably more important than Mr Osborne.”

To achieve a £10bn surplus by 2020, the IFS said Mr Osborne has “shuffled” money between years and pencilled in £3.5bn worth of “wholly unspecified” cuts to public spending in 2018.

He will also be forced to abandon his plans to ease up on austerity ahead of the next general election in 2020.

Mr Johnson was clear: “The public finances are kept on track only by adding yet another year of planned austerity.
“Spending in 2020-21 will be £10bn less than planned.”

Shadow chancellor John McDonnell said: “George Osborne’s failures have been further exposed today.

“Millions will be desperately disappointed to hear that George Osborne has had to continue austerity into the next decade and announce a further £10bn of spending cuts just so he doesn’t lose any face.”