The Panorama programme aired last night is rightly getting a lot of publicity with figures showing that people’s earnings have fallen in “real” terms by about 5% during the past two years.

But you really don’t need particularly detailed analysis to show how hard people’s earnings have been hit.

As this blog has shown before, while pay has been hit hard in real terms, construction folk have taken a much heftier hit than most.  Using the RPIX measure of inflation my calculations put the average earnings of construction workers, before tax, 10% down.

This though is just part of the story.

Sure, earnings have been squeezed. But mortgage interest rates have fallen too. The 2% or so average drop in rates has put more than £20 billion a year into the pockets of homeowners. That is about one grand a family, although clearly it’s not evenly spread.

If we correct for the effect of reduced mortgage payments, many people are still better off.

Crudely speaking, since the credit crunch, our living standards have broadly on average stayed fairly stable. But we have grown used to increasing real earnings during the ultra-low inflationary period of the previous decade or so. Against this trend we haven’t done so well.

But on average the real drop in earnings for many people has been masked by the very real drop in mortgage payments. This has dulled the pain.

So far.

The real pain is to come.

For me, among the least tracked figures within the latest Budget were the Office for Budget Responsibility forecasts for earnings and the expected rate of inflation.

That tells us how much pain (or were we in more buoyant times, how much pleasure) the Government thinks it is acceptable for us to bear.

In my Budget blog I whipped up a quick graph on “real” earnings implied by the OBR forecast. It’s nasty.

It broad terms it suggests that real earnings, pre-tax, will drop by at least 9%. So, with a tax squeeze being applied, that suggests there is at least as much pain on take-home pay to come.

Rather than being eased by falling mortgage payments, the squeeze will be exacerbated by the likelihood of interest rate rises and the falling away of more of the super-cheap tracker deals some inherited after the credit crunch.

So to reiterate my take on the budget forecast, this will hit the housing market, it will hit the market for repairs and maintenance, it will hit retail sales and probably retail related construction work.

Basically we will on average be getting poorer. And that’s for those in work.

On the OBR’s forecast, even by 2015 with the economy growing steadily those in work will be earning less on average in real terms than we were in 2000.

OK, statistically there is near certainty that the OBR forecast will be wrong. The trouble is we don’t know whether things will actually prove to be a bit better, a lot better, a little worse or heaven forbid a lot worse.

For the stato-types: I used RPI as the deflator in the graph. It’s a bit more extreme than the Government’s favoured CPI measure, but many believe it to be more realistic of the costs imposed by inflation. And, incidentally, I checked with CEBR, the consultants used to do some of the number crunching for Panorama, and the deflator used for that was also RPI.

(This is a revised version. The previous version was ambiguous given the differing components of the various inflation measures.)