Ongoing public sector salary freezes are causing continued reductions in take home pay and are eroding the spending power of millions of government workers amid rising living costs, figures released today suggest.

According to the VocaLink Take Home Pay Index, the downward trend in public sector pay growth is set to continue over coming months. Although the private sector enjoyed better and steady pay growth, two successive falls in household consumption imply the consumer side of the economy has entered a technical recession.