Recessions are costly. That was the message from the state of the nation report from the Institute of Fiscal Studies.
Real incomes, once changes to prices, taxes and benefits are taken into account, are 6% below their pre-crisis peak. Public borrowing this year is projected to be £111bn, 7% of national income, and interest payments on the national debt will be a drain on the exchequer for years to come.
Those Whitehall departments not protected by the coalition's ring fence will see a cut of more than 30% in their budgets between 2010-11 and 2018-19 if George Osborne sticks to his plan to continue austerity deep into the next parliament. And that assumes he finds an additional £12bn from the welfare budget.
Nor is it a bed of roses for those parts of public spending spared the axe. A rising and ageing population means, according to the IFS, that real age-related per capita spending on the NHS will be 9% lower in 2018-19 than it was when David Cameron came to power.
There's more that the IFS did not mention in its green budget.
Business investment as a share of GDP in the UK is one of the lowest in the western world, and once replacement of obsolete machinery is taken into account it is not really rising much at all. To cap it all, the balance of payments is in the red by more than 5% of GDP.
Certain conclusions can be drawn from all this. Osborne is clearly right when he says that Britain's deep-rooted problems have not disappeared as a result of a few quarters of decent growth. The recession highlighted structural weaknesses that have been worsening over many decades and the UK now has a severe twin-deficit problem that makes the pound look over-valued and vulnerable.
Unless and until a more sustainable economic model is developed consumer-led growth will only shrink the budget deficit at the expense of a bigger trade deficit. But the main conclusion from the IFS report is this: the great recession has left Britain a much poorer country. It cannot afford another one.
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