'When will there be riots?" eager journalists ask thinktanks, sociologists and anyone else who monitors Britain's unravelling social fabric. "When are the British going to imitate the Greeks and the Spanish and snap?"

On the face of it, their questions are reasonable. Contrary to the predictions of nearly every expert, inflation roared ahead of wage increases after the crash of 2008, squeezing the living standards of all but the most fortunate harder than at any time since the 1920s. The asinine George Osborne tightened the vice further by raising VAT in the middle of an outbreak of stagflation. Meanwhile his coalition's austerity programme is ensuring that public services will begin a long slow decline into shabby inefficiency, as public-sector workers start to lose their jobs en masse. Working- and middle-class families have already lost tax credits. The poor have already lost benefits.

About the only reason to be cheerful is that low interest rates help those with debts, which would otherwise be unsustainable. But by holding rates down, the Bank of England is effectively taking money from savers on modest incomes to spare debtors from default. Whatever the interest rate it sets, the half-shattered banks are reluctant to lend to business and homebuyers. They will become more reluctant as the unravelling of the eurozone kills the faint hopes of a recovery in Britain, and leaves the banks to deal with the consequences of yet more of their disastrous decisions as they write off yet more bad debts.

To cap it all, the distribution of the pain is so monumentally unjust it cries to high heaven for a reaction. The banking crisis and the flooding of the market with easy credit were the City's follies. But it is not London and the south-east which are suffering but the Britain north and west of the line from Severn to the Wash. While the state bailed out the City so the bars could carry on heaving and the banks could carry on delivering fantastic rewards to their "stars", it has allowed the provinces to sink. So complete has been the capture of the coalition by the moneyed interest that Osborne says in all seriousness that the one fiscal measure he simply must have at any price is not the relief of poverty or an easing of the burden on middle England, but a tax cut for the wealthiest 1% of earners.

These arrant insults ought to push the most mild-mannered people into revolt. Yet in Britain they provoke only students to riot. The wider public remains resigned rather than enraged; indifferent rather than incandescent.

The strangeness of the times explains the equanimity. As every economist tells us, we have gone through the worst recession since the 1930s and show few signs of recovering from it. But the crisis has not felt like a catastrophe even in the worst affected parts of the country. Recessions in popular memory mean 3 million or more out of work. Britain's unemployment figures have remained low.

True, like many statistics, the figures conceal as much they reveal. Joblessness has not shot up because firms have saved money by cutting real wages or increasing part-time working. Employers have added to the pinch on disposable income, but not put hundreds of thousands on the dole. How much longer they will be able avoid lay-offs is open to question – left-leaning economists at the Institute for Public Policy Research predict a sharp rise in unemployment within a year – but for the moment most people read about a terrifying economic crisis but do not see it in everyday life. Instead of experiencing a sudden calamity, struggling families are living with a gradual accretion of troubles.

In the old experiment, the scientist who dropped a frog in boiling water found that it leapt out at once. But if the scientist put it in cold water and slowly increased the temperature, the frog did not react to the danger of being boiled alive. Vidhya Alakeson, of the Resolution Foundation, who had already been asked by three journalists when she expected the streets to erupt on the morning I called, said we should not look for dramatic confrontations that would fill the schedules of the rolling news networks. Rather, we should turn our attention to families who once thought they were "bettering themselves", and notice their slow immiseration.

What we used to call the skilled working and the lower middle classes are stopping saving and contributing to pension schemes. They are taking payday loans or taking up coupon cutting. They are cancelling holidays, shopping online to avoid the temptations of impulse buying a visit to the supermarket might bring and worrying about how to heat their homes this winter. The standard of living they once took for granted is drifting beyond their reach.

The most significant sign of the crushing of ordinary aspirations is the collapse of the British expectation that if you made enough to get by you could become a property owner. In 2007, a couple earning around £40,000 between them would buy a property, particularly if they planned to have children. Today, with banks asking for huge deposits and offering 90% mortgages only to the borrowers who need them the least, what was once normal has become impossible. Divorcees, the downwardly mobile, the young working class and much of the young middle class must settle for renting in a market where the housing shortage has pushed rents to extortionate levels.

If insecurity continues to grow, our old assumptions will have to change. Imagine that Margaret Thatcher had died before the crash. Even her toughest critics would have had to accept that many of her reforms had succeeded and she had allowed the private sector to flourish. Now the world she left us has fallen apart, and her deregulation of finance in particular seems like a ruinous blunder. Tony Blair and Gordon Brown could once plausibly claim to have kept the dynamism Thatcher unleashed but brought a tolerance and a respect for public service the Tories could never have countenanced. Now that the financial system Labour relied on to provide the tax revenues for social reform has crashed, the centre-left's old maps are useless as well.

Thatcher's Enterprise Society and Blair's Cool Britannia are lost worlds The promises both parties offered to those who "worked hard and played by the rules" of rising living standards, a secure retirement and a better life for their children sound empty. Millions are living thwarted lives of quiet desperation, and cannot see a way to escape them.