AUSTERITY is here to stay for the next decade – or two – according to leading financial think tank, the Institute for Fiscal Studies.

That’s the damning verdict on Chancellor Philip Hammond’s Budget after analysis of his attempt to fix the UK’s struggling economy.

And they warn there are still £12 billion more to come in cuts to welfare, and that stagnating wages means workers will earn less in 2022 than they did in 2008.

The scrutiny of what Tory government has done to living standards came minutes after Ruth Davidson told Nicola Sturgeon to stop complaining about the Budget because she sounded “like somebody has stolen her scone”.

But, according to the IFS, the sluggish growth figures – put down to low productivity and Brexit – effectively mean the economy will shrink by £65bn by 2021, despite increased employment.

That means, on average, earnings will be nearly £1,400 a year lower than forecast.

Paul Johnson, the think tank’s director, warned: “Less than two years after Mr Osborne was promising a surplus of £10bn in 2019-20 Mr Hammond is promising a deficit of £35bn, falling – rather optimistically – to £25bn by 2022-23. Yet this is not the end of austerity. Not by a long chalk.

“There are still nearly £12bn of welfare cuts to work through the system, while day-to-day public service spending is still due to be 3.6 per cent lower in 2022-23 than it is today.

“Excluding health, the cut for the rest of public services is over six per cent. To keep this spending constant in per capita terms, spending would need to be £13bn higher in 2022-23 than currently planned.”

Most areas of public spending will still “have difficult years ahead” he added, predicting that public sector workers, many of whom have been waiting seven years for a pay rise, will have to keep waiting.

“While the public pay cap has been lifted, no additional money has yet been allocated and the Treasury is committed to providing extra money only for nurses,” Johnson said.

“Given the spending constraints, other public sector workers should not be holding their breath in anticipation of an inflation-busting, or perhaps even one per cent-busting, pay rise.”

The IFS were more forgiving than the Office for Budget Responsibility of the Chancellor’s plans to scrap stamp duty on homes valued at less than £300,000 for first-time buyers.

Although they agreed with OBR forecasts suggesting the cut would only lead to higher house price hikes bigger than any savings, this did not mean first-time buyers would necessarily be worse off.

“They are in general better off,” Johnson argued. “Instead of paying, say, £100,000 for £98,000 worth of house plus £2,000 of tax, they might be paying £102,000 for £102,000 worth of house. That’s a better outcome for them.”

He also noted that the Chancellor had managed to get through his Budget with only a fleeting mention of Brexit.

Hammond committed to putting £3bn aside for the preparations needed to leave the EU, but there was little other detail.

Johnson said: “Despite all the gloom we can hope for better – though we may still fear for worse. Or, in the words of Benjamin Disraeli, we should perhaps ‘be prepared for the worst, but hope for the best’.”

In Holyrood, the First Minister was accused of hypocrisy after the Scottish Government called the money supposedly coming to Scotland a “con”.

Hammond said an extra £2bn would come to Scotland because of the Budget, but more than half will be in what’s known as “financial transactions” or FTs – money allocated to the Scottish Government by the Treasury that can only be used to make loans or equity investments into the private sector.

Davidson said the First Minister had welcomed the FTs when it was the Scottish Government using them in their own growth scheme, but rejected them then when it was coming from the UK government.

Sturgeon said the Chancellor had stood up and, without qualification, promised an extra £2bn for Scotland – but FTs can’t be used on day-to-day spending on public services.

The First Minister said: “The Chancellor tried to give the impression that this was somehow a big boost to our health service, our education system and public services the length and breadth of the country but, as Ruth Davidson knows, that is far from the truth.

“In fact, the reality following yesterday’s Budget is, as the Fraser of Allander institute confirmed, that Scotland is facing a real-terms cut in our day-to-day budget next year of more than £200m, and more than £500m over the next two years.”

Davidson hit back:“We usually hear from the Scottish National Party that it is not getting enough money.

“Today we have a brand new one: it is the wrong kind of money that it is being given. Money that can be spent on housing? No, thank you. Money to tackle fuel poverty? How dare the UK Government.

“Only this First Minister could be handed an extra £2bn in spending power and still sound like somebody has stolen her scone.”

The SNP leader quoted Fraser of Allander Institute figures, warning of a drop in the block grant.

“Over the next two years, £500m will be cut from Scotland’s budget by the Tories, and Ruth Davidson has the nerve to stand up here and try to tell us that the Tories are doing us some kind of favour,” the First Minister said.