29 June 2012
Families to be £7,000 worse off by 2015
A House of Commons study has revealed that over the lifespan of the coalition government families will have £1,700 a year less than they did in 2010, this figure is already at £800 and is set to more than double in the next three years.
Since 1948 ‘real earnings’ (after inflation) have risen consistently, but this is no longer the case as take-home earnings have been hit by falling wages and rising unemployment. Coupled with this, households are being hit by a hike in fuel, food and energy bills.
These figures come in the wake of the Governor of The Bank of England Mervyn King revealing that he is ‘pessimistic’ about the future of the UK economy, and warning the public that they should brace themselves for at least five more years of economic turmoil.
The Office for Budget Responsibility has also revised down its forecasts for disposable family income from the Government’s 2010 spending review. Shadow Chief Secretary to the Treasury Rachel Reeves has attacked the Government’s record on recovery and said that the OBR’s initial forecasts had already taken into account the direct impact on household finances of tax rises and spending cuts such as last year’s VAT rise and this year’s reduction in tax credits.
This would appear to show that the economy is recovering slower than hoped, and that household finances are being forced to bear the brunt of this sluggish movement. The Bank of England has warned that households are facing a ‘ferocious’ squeeze on take-home pay.