Ever tightening purse-strings

The impact of public spending cuts and tax rises will affect housholds for as much as 10 years with the worst consequences still to come, an study into the effects of the economic situation has shown.

The Independent economic researcher for Fiscal Studies (IFS) said that the UK had been able to protect its citizens from feeling the full impact of the recession through 'unusually generous' increases in financial support.

Robert Joyce, a contributor to the report, said: 'The current economic downturn began more than three years ago, and may seem like old news.

'But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come.'

During 2008 and 2009, household incomes actually increased, but a 3.5% fall in median net household income in the months from the beginning of the year until April, the largest fall since 1981, shows that we are now feeling the true economic consequences of the recession.

UK measures against the deepening crisis have been challenged by business leaders, though the Chancellor George Osborne is adamant that they continue apace with the austerity measures laid out in last October's Comprehensive Spending Review. Speaking alongside Christine Lagarde, head of the IMF, he said: 'It is the rock of stability on which our economy is built.'

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