Britain on a Budget as Disposable Income Squeezed
Spending cuts and tax rises are causing a significant squeeze on Brits’ disposable income this year, new figures reveal.
According to Deloitte, a financial services firm, these changes combined with inflation are the main factors contributing to consumers seeing an average drop of £780 in their disposable income, the BBC reported.
The study reveals disposable incomes were at their best in 2009, with consumers having more money than ever to spend on non essential items in this year. Deloitte predicts it will take another four years before we get back to this standard of living.
Real incomes are expected to fall again this year, making it the fourth year in a row consumers have felt a fall like this since 1870. Real incomes are only expected to rise by the end of 2012.
Base Rate Remains at 0.5 percent
The Bank of England’s Monetary Committee yesterday announced their decision to keep the base rate at 0.5 percent, good news for those with outstanding debts and mortgage repayments.
“The prolonged low-base rate has created a challenging environment for savers and borrowers alike,” commented David Black, Defaqto’s Insight Analyst for Banking.
“With unsecured lending becoming more expensive, consumers should consider all potential borrowing options to ensure they get the right type of product for their needs.
Even though consumers can be sure their debt repayments will not rise this month, a rise in the base rate is set to increase soon, placing even more pressure on already stretched finances.
For those who struggle to stay within budget each month, a prepaid debit card could be a good aid to prevent overspending.
These cards can be used like other credit and debit cards for spending, however they do not have an overdraft so all the money spent is the user’s own money, and they can only spend the amount they loaded onto the card.