But THEN they have to stop. Until then Britain wants as much Russian gangster cash as possible. Of course, by 2019 we'll all be fighting 8ft tall radioactive scorpions (probably stamped with the Barclays logo) for the last drops of potable water:
According to the IFS, the squeeze on living standards will be the result of earnings failing to keep pace with prices, as well as the tax and benefit changes announced by the government to tackle the UK's record peacetime budget deficit.
"Welfare cuts and tax rises will act to reduce household incomes, and those with the lowest incomes are clearly set to lose the most from these reforms as a percentage of income (with the important exception of those with the very highest incomes). This is likely to increase poverty, other things being equal, offsetting some of the falls in poverty over the past decade."
Of course it isn't a record peacetime deficit (there are high levels of government borrowing, but that's another matter). The national debt was many times greater in 1948, when the NHS was founded (see picture). What's interesting in the IFS report is the line highlighted:
The IFS analysis is included in The Great Recession and the Distribution of Income, published on Monday by the London School of Economics. Professor Stephen Jenkins of the LSE said: "We were surprised at how little household incomes changed in the years immediately after the Great Recession began. This has been the worst macroeconomic downturn in most OECD countries since the Great Depression of the 1930s when there were substantial increases in poverty rates and other significant changes to the income distribution."
A pay freeze relative to inflation is a pay cut. This has been the strategy for several decades; hold down wages to raise profits. With inflation at 4-5% that's a big cut. Of course, it only half-worked, all those years. The previous mini long-boom was driven by speculation. Low effective demand combined with large amounts surplus capital, encouraged a culture of widespread borrowing and lending (borrowing to lend sometimes). It was fitting then this global pyramid scheme foundered on subprime mortgages.
Warning that pain had been delayed but not avoided, the IFS said families with children would be hit harder by Osborne's tax and benefit changes than other family types on average, with the poorest 10th of households suffering income losses of more than 8% over the next three years. "Recent IFS modelling predicted that child poverty will rise in each of the three years between 2010-11 and 2013-14, and that it will be about two percentage points higher in 2013-14 as a result of the tax and benefit reforms planned by the current government."
If you can't forsake the god of capital accumulation you will have to sacrifice your children to appease him.