The Institute for Fiscal Studies (IFS) suggest that an additional £50Bn of either revenue or spending cuts will be needed to close the deficit by 2020. However, the TUC analysis suggests that if wages had grown as the OBR originally expected – and if the government had not pursued an agenda of unfunded tax cuts – there would have been no need. There would be enough revenue already for the deficit to be almost completely gone.

TUC General Secretary Frances O’Grady said: “The Chancellor has failed to reduce the deficit because of his failure to get wages growing. He spent the last five years shrinking pay packets and as a result he plans to spend the next five shrinking the state to a level not seen since the 1930s – before we had the NHS and welfare state safety net.

“When wages go up, consumers spend more, businesses can grow, more income tax and national insurance rolls in and the deficit shrinks. We need a new plan for the economy that gets wages growing and keeps them growing.

“We can’t cut our way to a strong economy any more than we can dig ourselves out of a hole. More austerity will keep us stuck in a downward spiral. It’s time for a new long-term plan based on fair pay settlements and investment in the skills, infrastructure and innovation that creates decent jobs with decent wages.”