Overall, the latest UK economic data has been only slightly better than mixed. On the plus side , Q3 GDP at +0.4% was better than expected with higher Business Investment, the Labour Market remains strong, the Manufacturing Sector is going well while Services hold up and the Public Finances are resilient. Not so good are a drop year on year in October Retail Sales, although to some extent distorted by previous months, a soft Construction Sector and, very ominous in the UK, wobbling house prices. The real worry, however, is the squeeze on living standards with average earning only ticking over at just above 2% and the CPI hovering at 3%. The UK is not alone in this but the chart shows why the Bank of England and Treasury are worried. Real pre-tax income per head (black line) slumped in the 2008 crash and did not properly recover until 2011 (too late to save the Labour Government) and has been falling away since the 2015 election (after surging helpfully for the Tories). The bars indicate the three main factors : pre-tax pay (red) plus new employment (blue) less inflation (grey). This is a key component of the anger that fuelled the Brexit vote: subdued earnings, higher inflation, housing shortages and deteriorating public services. It would be a major challenge for any government, let alone one engaged in internecine conflict over Brexit. It is going to be painful to listen to the much-maligned Spreadsheet Phil deliver a Budget that will surely fail to face up to the challenge