The strike in Great Britain over a proposal to force workers to pay more for their retirement shows why the euro crisis will continue even if the EU can successfully address the sovereign debt issue.
High inflation, cuts and the longest period of wage stagnation on record will see the spending power of the average British family plummet over the next five years, a leading thinktank warned on Wednesday.
An Institute for Fiscal Studies analysis predicted that average incomes, adjusted for inflation, will fall by 3% this year and further in 2012. The director of the IFS, Paul Johnson, said: "In the period 2009-10 to 2012-13, real median household incomes will drop by a whopping 7.4% - a record matched only by the falls seen between 1974 and 1977."
As up to 2 million public sector workers walked out in protest against changes to their pensions, and signs emerged of a potentially damaging rift within the Liberal Democrats in the wake of George Osborne's autumn statement, the thinktank warned that families with children will be worse off in 2016 than they were 14 years earlier as they cope with more than a decade of austerity.
The IFS's warning and the strikes came as the world's major central banks announced joint emergency measures to stop the international financial system from freezing up, and pushing the global economy into another recession. The measures included cutting emergency interest rates on dollar loans to cash-strapped European banks.
A Downing Street spokesman said the emergency measures were necessary because the markets were under extreme strain. "We are experiencing a credit crunch and that central bank action is about trying to mitigate the effects of that credit crunch," the spokesman said.
A loss in real income is what's facing us here too. Contributing more to one's retirement while the value of their pay decreases is a hardship that many Brits appear unwilling to shoulder - despite the fact that the government has to cut its expenditures or risk the kind of sovereign debt crisis being seen across the channel.
It's going to get worse before it gets better.