That squeeze on relatively high earners is already showing up in the sales figures for the John Lewis department store, where partners would be advised not to blow their recent bumper bonus. The 1.6pc increase in sales in the six weeks to mid-March compared with 9.9pc in the half year to January, supporting evidence from the front line of the weakest consumer confidence figures since 1994.
On Wednesday, the Government will trumpet what it has already billed as the ?most pro-enterprise, pro-business Budget for a generation?.
All well and good, but the kinds of supply-side measures it might announce to, for example, simplify the taxation of smaller businesses, cut red tape and encourage investment are necessarily slow-burners. The risk is that this will be a ?growth tomorrow? budget.
What concerns me is that by focusing on the short-term imperative of fixing the Government?s balance sheet while setting in place the conditions for future growth, the Chancellor is taking his eye off the equally serious long-term problem of the collective household balance sheet.
Squeezed by ever higher taxes and rising prices, the savings required to support higher life expectancy and increased retirement and long-term healthcare costs are less and less likely to get a look in. We are not saving anything like enough .
The Chancellor faces a tough enough challenge to balance the books while promoting the growth that ultimately will ensure that those books can stay balanced. But while he?s juggling those two he must also find some encouragement for the majority who are barely muddling through, continuing to just about fill the tank and the supermarket trolley while they worry about the likely rise in the mortgage rate this year and finding there?s nothing left over to save for a decent retirement.
The good news is that the public finances are if anything likely to be a little better than forecast last November. If the Chancellor has a few extra billion to play with there will be no shortage of people making their case for a share. The nation?s hard-pressed savers have a strong one.
Tom Stevenson is an investment director at Fidelity International. The views expressed are his own. www.twitter.com/tomstevenson63 or email tomrstevenson@fil.com
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