Jeremy Hunt has an impossible task

Financial Statement must persuade UK voters that a record decline in living standards is a price worth paying

The most  uncomfortable man in Britain this weekend is the Chancellor of the Exchequer, Jeremy Hunt. He probably wishes he could join his former cabinet colleague, Matt Hancock, eating camel genitalia in the jungle.  Easy meat compared with the Budgetary Trial next Thursday. Mr Hunt, or c*nt as he was once called on the Today programme, will be pelted with insults and smeared with accusations of restoring austerity.

Which he cannot convincingly deny. The Chancellor is restoring the very policy that his Tory predecessor, George Osborne, imposed with disastrous results in 2010 and which Boris Johnson  promised he would never resort to again.

Austerity means balancing the books by tax increases and public spending cuts. And also  - if the Chancellor is honest - provoking the greatest fall in living standards in living memory. This is baked in.  The Bank of England has been forecasting this income squeeze since August. We are entering  the longest recession since the 1870s after the longest pay pause since the Napoleonic Wars.

Next week Britain will finally wake up to the fact that it has become, well, a relatively poor country.

Not like an impoverished African state, obviously,  or like India where millions are close to the poverty line, but certainly one of the poorer developed countries in terms of prosperity and national income. After two decades of low growth, poor productivity, booming debt and now an inflation crisis, the country that launched the industrial revolution is now getting the rough end of it. No wonder we’re becoming a land of angry people, unable to control  frustration with shop assistants and call centre employees.

For the first time in my adult lifetime we are all getting poorer together - except perhaps the super-rich who usually find ways to protect wealth. The new austerity will hit the poorest hardest. With inflation forecast at 11% some 5.3 million low earners will be financially wiped out, according to forecasters. Elderly voters on fixed incomes, who misguidedly saved for their retirement, will also be impoverished as their savings evaporate.

Forget the state pension triple lock. No one can live a comfortable life on £10,000 a year. One in three pensioners will have nothing else to live on according to the Financial Conduct Authority

Millions of public sector employees will be forced to accept below-inflation wage settlements. Though as the Bank of England Governor, Andrew Bailey, pointed out, they will be better off than most workers because of their trades unions' bargaining power. According to the Insritute for Fiscal Studies, public sector remuneration is currently 20%  higher on average  that that of private sector employees. Though tell that to the nurses who are striking for 17% pay increase and you might find yourself getting an unexpected colonoscopy.

Some might think this relative impoverishment of Great Britain is a good thing. That it will lead to a degree of humility in a nation, which has for too long regarded itself as a great  power and a beacon of prosperity. Ireland, which used to be regarded as a backward country whose main function was to provide cheap labour for the UK economy, now has a GDP per head that is almost  twice that of the UK: $99,000 v $48,000 according to the OECD.

People in Northern Ireland are beginning to wonder if they might be better off being part of Ireland, than part of the UK.  The SNP are thinking the same and this long recession could test the union to breaking point .

But there is no easy solution to the productivity paradox in or out of the UK as the more economically-literate nationalists realise.  The Scottish economy is even weaker in terms of GDP growth than the rest of the UK, a reality concealed by Barnett subsidies. After two decades of industrial decline, mostly under an  SNP government, Scotland has been left with a bootstrap economy and  little to offer the world apart from whisky and tourism.

UK debt has more than tripled in this period. Most of that borrowing happened after the financial crisis during the years of supposed austerity after the 2010 financial crash. One of the great myths of politics is that Conservative governments are averse to borrowing and debt. When he was Chancellor,  Rishi Sunak borrowed another £350bn during Covid, leaving the UK debt pile at a record £2.4 trillion.

Tory Chancellors have  been conducting a practical experiment in Modern Monetary Theory, the left wing doctrine that governments can spend borrow as much as they want because they can print money to pay for it. The Bank of England was only too happy to comply printing almost £1 trillion through Quantitative Easing,

This is now crashing into reverse at the worst moment in the economic cycle, during a European war and an energy crisis.  Suddenly government borrowing is becoming ruinously expensive as the monthly interest repayments on UK government debt doubled to £20bn - that’s like paying the cost of another furlough scheme on top of Liz Truss’s £100 billion gas price bail out.

Britain has collided with the harsh reality that debt sometimes has to be paid back. And the reckoning starts on Thursday.