Very good blog post by Larry Elliott, the Guardian’s Economics Editor, about what’s happened to Britain. Excerpt:

So why is the Britain of 2013 a much more placid place? One theory is that things are not really that bad. Living standards are now so high that a relatively small fall (in a long-term historical context) makes little or no difference to levels of contentment. A century of growth means that rich and poor alike live better, eat better, have more leisure time and enjoy far higher disposable incomes than did their forebears in the run-up to the outbreak of the first world war. The welfare state is now much more generous than the fledgling system set up by the Asquith government, while record-low interest rates mean cheap mortgages for owner-occupiers. A century ago, 10% of people owned or were buying their homes: today it is around 70%.

Theory number two is that while things might not be all that great here, they are a lot worse elsewhere in the world. People look at Spain or Greece and are thankful for small mercies.

A third theory is that the drop in living standards is accepted as the inevitable consequence of flying too close to the sun in the years before the crash. A period of personal austerity is seen as the necessary pre-condition for putting the economy back in decent shape, thus allowing the pattern of rising prosperity to resume, eventually.

There are doubtless other explanations but it is worth investigating the notion that what has been happening since the financial crisis is an aberration, albeit a fairly lengthy one.

Both the government and opposition believe this to be true. Politicians on the left, right and centre dream of a high-wage, high-productivity UK economy, forging ahead in new industrial sectors, wiping the floor with the international competition and generating the resources to fund a gleaming new NHS and top-quality care for an ageing population.

That’s the dream. The reality is that in the summer of 2013 we have a low-investment, low-wage, low-productivity and low-growth economy. And there’s little to suggest the outlook will change any time soon. Almost four-fifths of the jobs created in the UK over the past three years have been in industries where the wage is below £7.95 an hour. Over the same period, business investment as a share of national output has fallen from 8% to 5%, one of the lowest in the industrialised world.