I'm looking at you Professor Krugman.
It doesn't matter to people who are getting squeezed that the iPhone 4's price is dropping or that the BLS's hedonics say they're getting better quality in new cars when the price of gas refuses to go below $3.oo.
From the Wall Street Journal Europe's The Source blog:
Austerity, What Austerity – in the U.K.
For all the howls of Keynesian outrage at the austerity that’s crushing the U.K. economy, one little point seems to be missed: the U.K. government’s plans are to spend more money in each of the coming years than in the previous year.Also at The Source:
Government spending in the current tax year will be 1.2% more than in the previous one. Next year spending is projected to rise by 1.7%, by 1.2% the year after, 1.8% the year after that and 1.4% in 2015-16. Yes, but those are nominal spending numbers.
Factor in inflation and the story changes. U.K. inflation is expected to average somewhere north of 4% during the current tax year, having peaked at above 5%. In effect, the government’s spending has shrunk by 2.8%. At the same time, taxes will have gone up around 0.6% in real terms.
The U.K.’s problem this past year hasn’t been austerity so much as inflation. Rampant price increases set against anemic wage growth have stifled consumer demand. And given that the economy is so heavily geared towards consumption, that’s proved to be a large drag on the economy. Longer term, that decline in consumption is no bad thing. The Bank of England’s avowed intention has been to shift the engine of growth towards exports and business investment and away from household and government consumption....MORE
The U.K.’s Lost Generation
The full extent of the painful squeeze on British households was revealed in stark terms yesterday: Households will be worse off in real terms in 2015 than they were in 2002. In money terms that means the average household income in 2015 will be £22,516, £260 lower than it was 13 years earlier in 2002.Previously:
The Institute for Fiscal Studies, the respected economics think-tank that conducted the analysis, says this means Britons are living through the worst period for average living standards since consistent records began in the 1950s....
No Austerity Please, We're British: "Hammersmith and Fulham Council Spends $10 Grand on Panjandrum's Retirement Party