If Brexit was a victory for working people, why is the National Living Wage being revised down?

The Resolution Foundation predicts the wage will be 10p lower than expected in 2017


Nigel Farage called Brexit ‘a victory for ordinary, decent people’, while Theresa May says it was a rejection of a world ‘that works well for a privileged few’ but not for the millions left behind in Britain.

So how do they explain away today’s projection that slower wage growth post-Brexit will drag down the National Living Wage (NLW), costing low-paid workers up to £780 per year by 2020?

New analysis published today by the Resolution Foundation projects that the new NLW, which will take effect in April, will be 10p lower than previously predicted as a result of weaker pay outlook post-Brexit.

The longer-term forecast has also suffered. In March the Office for Budget Responsibility forecast that the NLW would hit nine pounds by the end of the parliament. Now the Resolution Foundation is projecting it will reach £8.60.

Policy analyst Conor D’Arcy commented:

“While there is much uncertainty over Britain’s long-term economic outlook, most economists agree that wage growth in the next few years is likely to be weaker than expected prior to the referendum. That means we’re unlikely to see the £9 National Living Wage that George Osborne talked about in this parliament.”

The NLW is set in accordance with median pay across the economy, so as wages generally stagnate, it will suffer too. Next year’s rate will be announced around the time of the Autumn Statement.

So Theresa May and Philip Hammond have about a month to come up with an explanation of why the lowest-paid workers — the ones they so often profess to putting first — are already taking a hit under their government.

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