UK Families Worse Off Than Any Time In Last Eleven Years
A recent survey has shown that families living in the UK at the moment are financially worse off than at any other time in the previous eleven years.
The research has been carried out by Alliance Trust’s research centre, using their financial reality index, which uses a wide range of economic and financial information to calculate an individual’s financial well being.
The results have shown that based on a family’s income, versus their expenditure on their mortgage, personal loans and other household expenses, combined with the current economic climate, the average net wealth across the UK has never been this low since the index began in 1997.
The main reason given for the current situation is due to the fact that although the economy of the UK has been slowing down since the end of last year, public spending was still growing through the first six months of this year, with many people applying for new loans and other credit in order to purchase non-essential items, thereby creating a false situation which is now finally starting to catch up with people.
Although average earnings in the UK have not increased in line with inflation, the cost of living has risen disproportionately through increased cost of food and fuel, also the cost of borrowing has gone up significantly, with many people now paying more on their loan and mortgage repayments, all of which have had an impact on the level of real earnings.
Shona Dobbie of the Alliance trust said “Consumers are currently facing the worst financial reality in the past eleven years. All three of our indexed measurements of consumer well being have decreased over the past quarter. Households now have to spend more on their mortgage repayments and council tax bills, combined with the fact that their earnings are failing to keep up with inflation and so they are feeling poorer and having to cut back in some areas of spending.”
She also predicted that the situation would get worse during the second half of the year, due to the likelihood of rising unemployment.
