Private sector squeeze key issue for UK post-Budget

Much of the commentary on the UK economy has been looking at the public sector squeeze, which has not yet started according to the numbers. It has ignored the private sector squeeze, which is long and deep.

Public spending in the first nine months of the coalition government has been running 7% higher in cash terms than the same period a year earlier. There has been much talk of cuts, but most of these have been delayed to future years. There has been little talk of spending increases, but there have been some significant ones in areas as diverse as overseas aid, health and the European budget, including assistance to Ireland. A recent piece of work from the IFS, commissioned by the BBC, got closer to the truth about the state of the UK economy at Budget time. Real incomes have fallen ...