WHILE it will undoubtedly be a relief to many hard-pressed households, the growing likelihood that the first rise in UK interest rates from their record low will happen later rather than sooner is absolutely no cause for celebration.

The sorry fact of the matter is that the Bank of England still feels unable to raise UK base rates because the economy is in such poor underlying shape. We should not be surprised it is in such a bad state, given the ill-judged path followed by the Conservative-Liberal Democrat Coalition, with an ideologically-driven austerity programme which has sucked demand straight out of the economy.

It was a matter of simple arithmetic that hiking value-added tax and implementing savage welfare cuts would weigh very heavily on economic activity, hitting hardest those who have to spend all of their money to live.

Even as he continued to champion an austerity programme which has not only been excessive but has crucially contained totally the wrong mix of measures, Chancellor George Osborne pledged in his March 2011 Budget to deliver "a Britain carried aloft by the march of the makers".

This has not happened, and he and his Coalition colleagues have opted instead to try to appeal to the electorate by fuelling house prices through major state-backed programmes. This has produced something of a feel-good factor in a nation obsessed with house prices but it is about as good an idea as going out drinking with a hangover.

What the Chancellor and his colleagues appear to be doing is storing up even greater trouble for the future, with a recovery which remains breathtakingly unbalanced.

It is another demonstration of the true underlying state of the economy that, even though the UK has recorded what on the face of it look like decent growth figures in recent quarters, the Bank of England's Monetary Policy Committee appears to be moving further away, rather than closer to, the first rise in rates this cycle.

Minutes of the MPC's October meeting, published on Wednesday, signalled that the seven committee members opposing a swift rise in rates were becoming more entrenched in their positions. These members cited the headwinds facing the UK economy, and saw signs growth was slowing.

They also cited risks to the UK from eurozone economic difficulties.

Mr Osborne has appeared to be at pains to get his excuses in early by pointing his finger at the eurozone. However, his problem in this regard is that things are in no great shape here.

The chancellor was in truly triumphant form at the recent Conservative Party conference in Birmingham. However, even given politicians' expertise in gilding the lily, it will be interesting to see what kind of victory he will be declaring next in the wake of awful public sector finances figures for September. These figures, published this week, signal the Coalition is likely to overshoot its borrowing target this fiscal year.

If Mr Osborne is interested in looking for root causes, the Coalition's badly-judged austerity programme would be a good place to start.

We must not underestimate the pressure on consumers laid low by years of falling real incomes.

Figures this week showed Scottish retail sales value falling in September at its fastest underlying year-on-year pace since records began. The figures, published by the Scottish Retail Consortium, showed the value of retail sales in September was down 2.9 per cent on the same month of 2013.

A survey yesterday from Scottish Chambers of Commerce also signalled miserable times for retailers and pointed to a slowing of overall growth in the economy north of the Border in the third quarter. There have also been plenty of signs recently that expansion is weakening in the UK as a whole.

Bank of England chief economist Andy Haldane last week talked about the twin forces of economic agony and ecstasy in the UK.

His "ecstasy" index is based on unemployment, inflation and gross domestic product growth, and signals the UK is in "fine fettle". Then again, inflation appears to be low in part because of economic weakness, the mix of employment is less appealing than it was, and it is only very recently that the UK has managed to grind out a few quarters of better, if unbalanced, growth after years of misery.

Mr Haldane's "agony index" is based on real wages, real interest rates and productivity growth.

He said: "Such an extended period of agony is virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the World Wars and the early 1970s."

For the vast bulk of the population, and with the possible exception of some of those who have enjoyed a cut in the top rate of income tax under the Coalition, there has been no ecstasy. But there has been plenty of agony.

Mr Haldane said he was now "gloomier" on the economy than he had been, and believed interest rates could remain lower, for longer.

This might be convenient for Mr Osborne, in terms of not upsetting his house price boom and the associated feel-good factor before next May's election. But the truth of the matter is surely an inconvenient one for him: interest rates cannot rise at least partly because his grand economic plan has not worked.