Chris

You can't give out pay rises to common workers or anyone else, when the cash isn't there to do it. We are in a recession - businesses are making less money and are borrowing less too. That's why people are losing their jobs. Business is not making the profit with which to pay them. The State can't stuff the pubic sector with pay rises either, because this requires tax rises that the real economy (the private sector) simply cannot bear.

The only place there is a massive hoard of distributable cash is in the Treasury - not in balances as such, but in the tax system. The government has the option of short-term tax cuts in order to put money in the hands of consumers. The flip-side is that this carries inflationary risk, which would be tricky to deal with via the usual means (raising interest rates) because the economy is so fragile, and so many people still have unsustainably large mountains of debt attached to their houses (many of which are no longer worth enough to pay that debt off, if it came to it).

This is, of course, all academic, because an economic tsunami of terrifying proportions is even now rolling its way across the ocean towards us. When the Euro implodes - and it is going to - all bets will be off. I'd start learning how to live with less right now, if I were you.