Chancellor Rishi Sunak's Covid-19 giveaway might be putting some people into the Christmas spirit, but the financial respite will not last.
Already public sector workers – with a few exceptions – have been told they cannot get a meagre £250 pay rise because the private sector is having to lay off staff and we all have to be in it together.
But even with parsimony – or as former chancellor Gordon Brown would have put it, 'prudence' – the fact remains the Covid-19 bill is only getting larger. Some £22bn debt accumulated to the UK's account in October alone.
Household debts excluding mortgages are rising. Lenders are pulling back – naturally – from high loan-to-value lending on grounds of affordability.
While some might call this a harsh blow to first-time buyers, this is absolutely the right thing to do, especially as unemployment levels are rising and will do so exponentially once furlough schemes end.
True, we're only halfway near the levels of unemployment seen in the 1980s – remember the banners flown from the old Greater London Council building opposite Westminster that said "3m unemployed and rising?"
But it is rising, and young people are statistically the most likely to be negatively affected.
No bank wants to have to repossess their homes because borrowers cannot meet their ongoing mortgage obligations.
Likewise, while every higher-rate taxpayer with a pension breathed a collective sigh of relief when Mr Sunak did not talk of tax changes in his most recent spending review, commentators are right to sound a warning bell.
Taxes will have to come – and they will come where there is potential for the highest possible benefit to the Treasury. Expect a flat-rate pensions tax to come into force and make plans accordingly. Expect a U-turn, or at least a J-turn on the triple lock at some point.
It's possible to expect a flatlining – or even a reduction – in the personal allowances over the next five years.
People have been saying these things could never happen – but 2020 has shown us that anything can, and indeed does, happen.
For the sake of paying back a debt and getting the UK into a decent financial footing as we head into life outside of the EU, we are all going to have to pull together and that means taking some tough tax decisions on the chin.
That said, it does seem galling that a paltry pay rise for public sector workers – many of whom are on persistently low salaries – has been ruled out.
Heck, at £250 I'd pay 10 public sector workers' annual pay increase. Point me in their direction.
Simoney Kyriakou is editor of Financial Adviser
