What a difference a year makes. The UK economy lurched into 2011 sluggish but hopeful, with predictions of GDP growth of 2.2 per cent, surging to a healthy 3 per cent in 2012. Inflation was thought to be a temporary worry at an RPI rate of 4.7 per cent. Unemployment was stable just below 2.5 million.
The October 2010 Spending Review had set the scene for an austerity programme to reduce the budget deficit. There was more fear of cutbacks than actual pain – although that was to come soon enough. (more…)