Warning: not a pretty chart. It shows how average household disposable income has changed every year since 1955, and it’s mostly a story of progress. As the years go by, we have seen our disposable income increase most years. But here’s where it gets tough, because this ride is about to come to a disastrous end. In March, the Office for Budget Responsibility produced this chart and it showed the worst year for changes in disposable income since records began in the 1950s. Back then, Rishi Sunak was chancellor and behind the scenes he was furious with the OBR. Why did they ruin his spring statement with the map of their misery? Now move on to today. The OBR updated the chart for the Autumn Statement and the forecast was even worse. We are now facing not just the worst year for household disposable income in modern history, but two worst years, back-to-back. It’s as bleak as you could imagine. And if there’s one chart you want to keep in mind over the coming months, as households face a strain they rarely like, and many are pushed ever closer to poverty, it’s this. However, this time, far from being furious at the publication of the chart, the Treasury essentially embraced it. And this change in your attitude probably says a lot. While Mr Sunak once wanted to downplay the economic woes facing the country, today he wants to highlight it. The government wants everyone to know how tough things are because the fiscal measures it is implementing in the autumn statement would be doubly unpleasant without some sort of justification. The reasoning in Whitehall is that if people realize how bleak the economic climate is, they may be more willing to tolerate another dose of fiscal austerity. It’s worth saying, though, that the pressure honored within the fall statement isn’t as harsh as pre-event leaks might suggest Numerically, at least, it is not the austerity we saw in the Osborne years. But for many government departments already cut to the bone, it will feel pretty brutal. For education and the NHS, there have been unexpected increases in funding – but inflation is likely to affect these increases very quickly indeed. However, take a step back and see where public finances land in five years. In March, the plan was to reduce net public sector borrowing to £31.6bn by 2026/2027. As of the Autumn Statement, the plan is to reduce it to just £80.3bn. In the past, this would have been considered a high fiscal deficit – over 2% of gross domestic product. It is not fiscal conservatism. But for all the talk of austerity and cuts, the reality is that the chancellor hasn’t cut as much as some expected. That’s not to say there’s much joy coming from the Treasury: there will be an average of £55bn of contraction – all to plug the much-vaunted black hole that some economists argue never really existed. Read more: Autumn statement highlights at a glance Millions to pay more tax after autumn statement All the features of a Labor budget | Beth Rigby But if the chancellor wanted to get the public finances back to where they were supposed to be from March, it would involve an extra £50bn of cuts – truly appalling austerity. This was, in one sense, a very middling budget event: decidedly dull, decidedly bland and decidedly lacking in surprises. It looks less like an economic philosophy than an attempt to clean up a mess. Use Chrome browser for more accessible video player 2:25 Hunt was asked about the fall statement Much of the paper is devoted to documenting how the possible promises of the Truce era drove public finances in one direction, before being brought back down to earth in the Sunak era. The question now is whether untangling all this spaghetti will really help the Conservative Party rebuild its trust with the British public. And, above all, the question is how the public will fare in the coming months. The OBR’s forecasts paint a picture of a recession unlike most we have felt in a long time – a recession not of the business sector or the financial system, but one that hits consumers in the pocket. It’s going to be a very painful few months. The difference is that this time, the government isn’t afraid of charts that tell you just that.
