Further financial pain in 2011

British households should brace themselves for greater pain in 2011 than 2010, as the brunt of the government's tax rises and spending cuts come into force, economists have warned.

Capital Economics has predicted that the worst year of the fiscal squeeze will be in 2011. Most consumers will feel financially worse off as a result of changes to the tax and spending regimes. Economists have calculated that as much as 2.5 per cent could be knocked off household income growth during 2011.