The consumer-driven momentum that has kept the British economy afloat since the Brexit vote is declining rapidly, with new data showing households in the grip of the most protracted squeeze on living standards since the economic crisis of the mid-1970s.
Against a backdrop of rising prices and stagnant wage growth, incomes adjusted for inflation have now fallen for three successive quarters, the first time this has occurred since the International Monetary Fund had to bail Britain out in 1976.
We should obviously be celebrating then, no? Because 1976 was when we were most equal, also when the Labour Share of the economy was at its highest ever. And yes, I really have seen articles from some, including Polly, making exactly that argument, that 1976 was the best year for just those reasons.
At the same time, the amount being set aside as savings has now slipped to just 1.7% of disposable income – the lowest level on record, and a fraction of the near-10% average for the last 50 years. Just a year ago, it was more than three times the current rate.
And isn’t that actually the point of Keynesian economics? Recession are when people are saving too much, so to get out of one we should encourage people to stop saving?
Or is that all in reverse now we’ve Tories in office?