If you are not a regular reader of the paper FT it’s worth buying it today if only for two pieces by our economics editor Chris Giles alone: A feature in which he casts a doubtful eye over the coalition’s “growth claims” and another piece examining the worst losers from the austerity programme.
Perhaps unsurprisingly, it is white-collar public sector workers who are going to be more squeezed than anyone else. Firstly about 320,000 public sector workers are set to lose their jobs over the next four years.
Secondly, those who remain in their jobs will see a real terms fall in gross pay by 6.6 per cent by 2014-15. They also face a 3 per cent rise in pension contributions and tax rises and benefit cuts of around 3 to 4 per cent.
Chris tells me that, for technical reasons, you can’t simply roll this up into a figure of nearly 14 per cent; but the true figure – for many people in this position – is not going to be far off.
It puts into perspective the drop in living standards between 2008 and 2011 (for a typical worker, public or private) which BBC economics editor Stephanie Flanders discussed on her blog today. As she writes:
after tax, the real income of the median household in the UK, right in the middle of the income distribution, will be 1.6 per cent lower in 2011 than it was in 2008
If and when interest rates rise – a process which could begin as early as August – the pain will be considerably worse, with mortgage repayments for many families facing sharp increases.
In this light the public may not be overwhelmed with gratitude for any giveaways in Wednesday’s Budget, which will include the scrapping of a rise in air passenger duty and the cancellation (or part-cancellation) of a rise in fuel duty.
In case you didn’t see it first time around, here is our Austerity Calendar detailing most of the benefit cuts and tax rises already baked into the fiscal cake for the coming years – including 16 such changes in April alone. We will update this after Wednesday’s Budget.