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Seventeen year low for spending power

Seventeen year low for spending power
9th May 2008

According to a recent report the spending power of the average household in the UK has hit its lowest level in seventeen years, with a range of soaring costs affecting spending power levels in most households. This includes bills such as energy and council tax, rising living costs such as food and petrol, and high mortgage repayments.

The reports shows that over the past six years the proportion of income that households have had to pay out on these sorts of costs has soared, leaving most with very little money to spend on themselves. This has, of course, had a dramatic knock on effect on the economy, which has suffered a significant slowdown over recent months.

The amount of disposable income that the average household now has is at its lowest level since 1991, and according to some industry officials the situation is set to get worse. This is because they expect food costs and energy prices to soar over the course of the year, which will put additional strain on household finances.

Figures from the Daily Mail's Cost of Living Index recently indicated that the average household needs to find an extra £100 each month simply to cope with all of these rises without having to make any further changes or cutbacks. The Index also showed that taking into account increased mortgage costs some households could be searching for an additional £2000 a year.

The figures have resulted in scathing attacks from the Conservative Party, which is using the information to question the competence of the Labour Party. The Shadow Chief Secretary to the Treasury stated that families were feeling far worse off financially under labour, having to cope with stagnant wages, sky high prices, and stealth taxes. The Conservative Party has also attacked the scrapping of the 10p tax rate, stating that this is placing further financial pressures on already struggling households.

Whilst the outlook for disposable income levels for the rest of the year are bleak according to the report, officials also predicted that interest rates could fall as low as 3.5%, which could help to bring more stability to millions of households.


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