In two weeks’ time, Philip Hammond is expected to declare an ‘end to austerity’. Today’s figures on wage growth are a reminder of why he needs to tread extremely carefully on this. What he will mean is that austerity is over for the public finances – he is confident enough to start increasing government spending again. Many individuals and families, on the other hand, remain deep in personal austerity. There is very little room for tax rises without making people feel poorer.
News that wages are growing at their highest rate – 3.1 per cent – since the economic crash of 2008/09 is, on the face of it, a cause for celebration. It will also confound the doom-laden predictions which continue to be made by pro-Remain think tanks – in January, for example, the Resolution Foundation claimed that real wage growth in 2018 would be zero. Take into account CPI inflation at 2.4
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