Pay more tax, get less in return: this budget lays bare the bleak reality of Britain’s economy | Gaby Hinsliff

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Sometimes it feels as though you’re running ever faster just to stand still. No matter how hard you work or how careful you are with money, it’s never enough. Life feels more of an uphill struggle than it was, for reasons you can’t always identify, especially if you have in the past been comfortable enough. That feeling of treading water is already grimly familiar to many Britons and will shortly become familiar to an awful lot more.

What Jeremy Hunt didn’t spell out in today’s autumn statement was that living standards are forecast to fall by 7% over the next couple of years, according to the independent Office for Budget Responsibility. Imagine turning the clock back to 2013, but not in a good way. Inflation will remain uncomfortably high well into next year, as protection from high energy bills is scaled back. Taxes will rise over the next six years via a stealthy freeze in the tax-free allowances applied to everything from earnings to inheritances and national insurance contributions, so over time a greater percentage of whatever you have is sucked into the taxman’s net.

You are not going backwards exactly, but you are not moving forwards as you expected, and the things you wanted feel increasingly further out of reach. Meanwhile, from 2025 onwards, some spending departments face frankly implausible real-terms spending cuts. Pay more tax, get less in return. It’s not jam today or even tomorrow, but years of dry toast.

It’s all so politically toxic, it’s hard to believe it will ever actually happen, particularly as so much of the pain is pushed into the next parliament. Is the government assuming that by then it will be Labour’s problem? Or simply hoping something will have turned up, allowing them to say that actually it’s no longer necessary? There was an odd air of unreality hanging over this statement, seemingly designed to prove Rishi Sunak’s willingness to undergo whatever ritual humiliation the markets demand to prove he’s not Liz Truss. Step back a bit, however, and the whole thing is a humiliating admission of failure. The one thing achingly absent was the word “sorry”, not just for the Truss era but for the 12 lost years running up to it.

To Labour jeers, Hunt insisted that the recession we are now back in was “made in Russia”, not here. But while the war in Ukraine certainly sent inflation rocketing, Britain’s problems have deeper roots. We are the only G7 country whose economy is still smaller than it was pre-pandemic, and it wasn’t exactly a raging success then. Economic growth since 2010, according to Labour, has averaged a positively anaemic 1.4%, productivity is woeful, and successive Conservative governments have lacked a cure for what ails us.

The Bank of England governor, Andrew Bailey, this week helpfully offered two reasons why Britain might be struggling. Brexit is the obvious one, estimated to have permanently shrunk GDP by 4% compared with staying in the EU, but the second was a shrinking workforce. A sharp rise in people not working due to illness correlates suspiciously closely to rising waits for NHS treatment – with overloaded mental health services a potentially significant part of that, especially for the young.

The next preventable exodus on the horizon may be parents of small children, with a poll of Mumsnet users showing 18% have quit or are considering quitting work because they’d be better off unemployed given the cost of childcare – which is so high thanks to years of systematic underfunding of nursery places. (That sound you hear is the squawking of chickens coming home to roost.)

Being forced to stay at home when it’s not what you’d have otherwise chosen is sad, frustrating and economically disastrous; it means people being lost to jobs in which they could have made useful contributions to society, and taxes lost to the Treasury. Hunt’s promised review into obstacles to being in the workforce is thoroughly welcome, but only if it honestly explores and tackles factors like this. For if public services have already crumbled to the point where they’re actively holding the country back, the years of spending cuts ahead look even more alarming.

Economists will doubtless argue for years about whether this not-quite-budget was in retrospect a panicky overcorrection for Truss’s wild adventures, imposing cuts that will only deepen the coming recession, or whether failing to act would have made things worse. But all we can say for certain now is that it’s not simply austerity 2.0, which for many natural Conservative voters was broadly something that happened to other people. This time, nobody is immune, with tax rises doing far more of the heavy lifting than under Osborne: anyone who has a job, a gas bill or a car, or pays council tax, will feel it, but capital gains tax changes mean so will the second home and share-owning classes.

There are glimmers of the promised compassion. Benefits will at least rise with inflation, there’s a chunky increase in the national wage, and the poorest get extra support with energy bills. But protecting vulnerable people isn’t just about benefits. It also means funding schools where pupils still haven’t caught up on what they missed during Covid, and knowing that if you ring 999 in an emergency the ambulance won’t take four hours to come.

In 2010, hospitals and schools were in good shape thanks to years of generous Labour funding, so when the tap was turned off it took a while to feel the difference. This time round, there will be no such grace period, and the extra billions promised for health, education and social care will surely be swallowed up fast by inflation and public sector pay rises.

Ever since Rishi Sunak emerged blinking from the scrum that engulfed Liz Truss, the country has wondered what Sunakism actually means. Calling it a return to “grownup politics” merely describes a basic level of competence we should be entitled to expect from senior politicians: listening to advice; reading the brief instead of winging it; levelling with voters, not lying to them. It doesn’t tell us what he really thinks. But neither in the end does this quasi-budget.

The decisions outlined here are technically choices, since a different government might have chosen differently. But they’re not choices in the sense that this is what Sunak really wants; they’re the kind of choices Conservatives make only when they’re exhausted, defeated, backed into the corner. This government looks increasingly like a tail-end batsman, trudging out on to the pitch willingly enough, but knowing it has little chance of changing the score. And much like the rest of us, just treading water, waiting and hoping something turns up.

Gaby Hinsliff is a Guardian columnist