If you thought the recession was over - think again. Households around Britain are only just beginning to feel the impact of the downturn, with another decade of financial pain likely.
Falling incomes, underemployment, and sweeping cuts in spending - families across the country are only now beginning to feel the real impact of the economic downturn. In fact, the Institute for Fiscal Studies has warned that there are 10 more years of financial pain to come.
In its latest report, the IFS said households around the country had already seen the biggest drop in living standards for 30 years. Under Gordon Brown's administration, families were cushioned from the worst effects of the recession with what the IFS described as "unusually generous" financial support. But that came at a cost too: hefty government borrowing, which is now being repaid.
And over the last year, under the coalition's deficit-busting package of austerity cuts, earnings, state benefits and tax credits have all fallen in value. Wages have failed to keep up with inflation, and cuts in public services have meant a whole swathe of job losses.
It's all meant a net fall in median household incomes of another 3.5 per cent this year. The IFS also warned that lower income families have been hit the hardest.
"Given that the annual welfare budget is being cut by £18bn, this is perhaps not a surprise," it added. It also warned that child poverty will rise in each of the next three years.
It's hurting, but it ain't working. The cuts have stamped on growth. - Brendan Barber, TUC General Secretary
The Treasury says the coalition has managed to keep interest rates low, helping homeowners. And the Chancellor George Osborne has resisted calls to rethink the scope and pace of the cuts - describing them as the "rock of stability" upon which Britain's economic recovery will be built.
Calls for a 'Plan B'
But the stark warning by the IFS will undoubtedly fuel calls for an alternative "Plan B" to boost economic growth - not least from the TUC, whose General Secretary Brendan Barber made his keynote speech to its annual conference today.
He described the austerity cuts as "cruel", adding: "It's hurting, but it ain't working. The cuts have stamped on growth."
Doubts over the Coalition's strategy are being expressed beyond the traditional critics, like this, from The Economist: "The left is right on one thing: the main cause of the current high joblessness is the severity of the last recession and the weakness of the subsequent recovery...the main culprit is a collective, premature shift to fiscal austerity by governments."
In fact, this fundamental disagreement over fiscal restraint is amplified even more strongly across the Atlantic. As Republicans fight for even tougher spending cuts, President Obama has launched his own plan to get millions of Americans back to work, including substantial new infrastructure spending to create much-needed jobs.
Back here, there are some signs that the determination to slash the deficit within four years may have some room for manoeuvre, as the Pensions Secretary Iain Duncan Smith hinted this morning. The chancellor, he said, was "looking carefully at a whole new raft of things that we could be doing to actually give the economy another push, and another kickstart in the direction of greater growth."
For millions of families across the country, however, the future is looking bleak: another decade of squeezed incomes. Social inequality is also set to rise, a the drop in wages affects lower paid workers the most, while benefits are rising even more slowly than earnings. The TUC estimates that some unskilled and semi skilled jobs now pay little more in real terms - and in some cases less - than they did in the late 1970s. Time, they're warning, for another autumn of discontent.
- Effects of 'Great Recession' across OECD Institute for Fiscal Studies report