The collapse in disposable income will be about as grim as you can imagine – so why is the government embracing it?
Let’s start with a tale of two charts. Or rather, one chart.
Be warned: it’s not a pretty chart. It shows how average household disposable income changed each year since 1955 and for the most part it’s a story of progress.
As the years have gone on, we have seen our disposable incomes rise in most years.
But here’s where it gets gritty, because that run is about to come to a crashing end. Back in March, the Office for Budget Responsibility produced this chart, and it showed the single worst year for disposable income changes 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 finely honed spring statement with their chart of misery?
Now roll forward to today. The OBR updated the chart for the autumn statement and the prognosis was even worse.
Now we are facing not just the worst year for household disposable income in modern history, but the two worst years, one after another. It is about as grim as you could imagine.
And if there’s one chart you want to bear in mind over the coming months as households face a squeeze the likes of which they rarely ever have, and many are pushed closer than ever before towards penury, it’s this one.
However, this time around, far from being furious about the publication of the chart, the Treasury has effectively embraced it. And this change in attitude tells you rather a lot.
Whereas Mr Sunak once wanted to play down the economic misery facing the country, today he wants to emphasise it.
The government wants everyone to know how tough things are because the fiscal remedies it’s implementing in the autumn statement would be doubly unpalatable without some sort of justification.
The rationale in Whitehall is that if people realise how miserable the economic climate is, they might be more willing to put up with another dose of fiscal contraction.
It’s worth saying, however, that the squeeze priced in within the autumn statement is not quite as tough as the pre-event leaks might have suggested
In numerical terms, at least, this is not the austerity we saw during the Osborne years. But for many government departments already cut to the bone, it will feel pretty brutal all the same.
For education and the NHS, there were unexpected increases in funding – but inflation is likely to eat into those increases very quickly indeed.
However, take a step back and look at where the public finances land in five years’ time. Back in March, the plan was to get public sector net borrowing down to £31.6bn by 2026/27. As of the autumn statement, the plan is to get it down to only £80.3bn.
Back in the day, this would have been considered a high budget deficit – above 2% of gross domestic product. Fiscal conservatism this ain’t.
But for all the talk of austerity and cuts, the reality is that the chancellor didn’t cut quite as much as some had expected.
This is not to say there is much joy coming our way from the Exchequer: there will be an average of £55bn of contraction – all to fill in the much-vaunted black hole which some economists argue never really existed.
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But had the chancellor wanted to get the public finances back to where they were supposed to end up as of March, it would have involved an extra £50bn of cuts – truly grisly austerity.
This was, in one sense, a very middle-of-the-road fiscal event: decidedly boring, decidedly unshowy and decidedly lacking in surprises. It reads less like an economic philosophy than an effort to clean up a mess.
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Much of the documents are devoted to accounting for how the potential promises of the Truss era ballooned the public finances in one direction, before being yanked back towards earth in the Sunak era.
The question now is whether unwinding all that spaghetti will actually help the Conservative Party rebuild its trust with the British public.
And, most of all, the question is how the public will fare over the coming months.
The OBR’s forecasts paint a picture of a recession unlike most we’ve felt for a long time – a recession not of the business sector or the financial system, but one that hits consumers square in the pocket.
It’ll be a very painful few months. The difference is that this time around, the government isn’t afraid of charts telling you precisely that.
Nigel Farage has told Sky News he “can’t be pushed or bullied” by anybody after Elon Musk said the Reform MP “doesn’t have what it takes” to lead his party.
In an interview with Sky’s political correspondent Ali Fortescue, Mr Farage said he has spoken with the billionaire owner of X since his criticism on 5 January, when Mr Musk said: “The Reform Party needs a new leader. Farage doesn’t have what it takes.”
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Asked if the pair are still friends, Mr Farage said: “Of course we’re friends. He just says what he thinks at any moment in time.”
He added he has “been in touch” with Mr Musk, though wouldn’t divulge what they had discussed.
“Look, he said lots of supportive things. He said one thing that wasn’t supportive. I mean, that’s just the way it is,” Mr Farage said.
Musk and Farage met in December. Pic: PA
Asked if he was afraid to criticise the tech mogul, the Clacton MP said the situation was “the opposite”, and he openly disagreed with Mr Musk on his views on far-right activist Tommy Robinson.
Mr Farage said: “What he [Musk] was saying online was that effectively Tommy Robinson was a political prisoner and I wouldn’t go along with that.
“If I had gone along with that, he wouldn’t have put out a tweet that was against me.
“By the way, you know, I can’t be pushed or bullied or made to change by anybody.
“I stick to what I believe.”
Mr Musk has endorsed Robinson and claimed he was “telling the truth” about grooming gangs, writing on X: “Free Tommy Robinson”.
But Mr Farage said that Robinson, who is serving an 18-month jail term for contempt of court, isn’t welcome in Reform UK and neither are his supporters.
He said: “If people within Reform think Tommy Robinson should be a member of Reform and play a central role in Reform, that disagreement is absolutely fundamental.
“I’ve never wanted to work with people who were active in the BNP. I’ve made that clear right throughout the last decade of my on/off political career. So that’s what the point of difference is.”
Despite their disagreement, Mr Farage said he is confident Mr Musk will continue to support Reform and “may well” still give money to it.
The entrepreneur has previously spoken positively about Reform UK and there have been suggestions he could make a multi-million-pound donation in its favour.
Devolution plans ‘denial of democracy’
Mr Farage was speaking from Reform’s South East of England Conference, one of a series of regional events aimed at building up the party’s support base.
Elsewhere in the interview, he hit out at the Labour government’s devolution plans which could see some local elections scheduled for May postponed.
This would apply when councils seek permission to reorganise, so that smaller district authorities merge with other nearby ones to give them more sway over their area.
Mr Farage, who is hoping to make gains in the spring contests, claimed the plans are not about devolution but about “elections being cancelled”.
“I thought only dictators cancelled elections. This is unbelievable and devolution or a change to local government structures is being used as an excuse,” he said.
Reform UK leader Nigel Farage earlier this month. Pic: PA
He claimed Tory-controlled councils are “grabbing it like it’s a life belt”, because they fear losing seats to Reform.
“It’s an absolute denial of democracy,” he added.
Mr Farage was also asked why many Reform members don’t like to speak on camera about why they support his party.
He said he did not accept there was a toxicity associated with Reform and claimed there was “institutional bias against anybody that isn’t left of centre”.
Specialist search teams, police dogs and divers have been dispatched to find two sisters who vanished in Aberdeen three days ago.
Eliza and Henrietta Huszti, both 32, were last seen on CCTV in the city’s Market Street at Victoria Bridge at about 2.12am on Tuesday.
The siblings were captured crossing the bridge and turning right onto a footpath next to the River Dee in the direction of Aberdeen Boat Club.
Henrietta Huszti. Pic: Police Scotland
Eliza Huszti. Pic: Police Scotland
Police Scotland has launched a major search and said it is carrying out “extensive inquires” in an effort to find the women.
Chief Inspector Darren Bruce said: “Local officers, led by specialist search advisors, are being assisted by resources including police dogs and our marine unit.”
Aberdeenshire Drone Services told Sky News it has offered to help in the search and is waiting to hear back from Police Scotland.
CCTV of the sisters. Pic: Police Scotland
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The sisters, from Aberdeen city centre, are described as slim with long brown hair.
Police said the Torry side of Victoria Bridge where the sisters were last seen contains many commercial and industrial units, with searches taking place in the vicinity.
The force urged businesses in and around the South Esplanade and Menzies Road area to review CCTV footage recorded in the early hours of Tuesday in case it captured anything of significance.
Drivers with relevant dashcam footage are also urged to come forward.
CI Bruce added: “We are continuing to speak to people who know Eliza and Henrietta and we urge anyone who has seen them or who has any information regarding their whereabouts to please contact 101.”
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