Brits 15% worse off than 5 years ago


Brits 15% worse off than 5 years ago
UK households are now 15 per cent worse off than five years ago, according to a now report.

The Ernst & Young Annual Discretionary Income Study shows, due to hikes in oil and food prices after tax and bills, the average home has less than 20 per cent of its gross income left, compared with 28 per cent five years ago.

An average household's monthly discretionary income is now £772.79 - compared with £909.84 in 2003/04.

"Many UK consumer segments are clearly feeling the pinch as big rises in household costs are far outstripping relatively modest wage inflation," said Jason Gordon, director of retail at Ernst & Young.

Fixed monthly household costs have risen nearly 45 per cent in the last five years – and these costs now account for 53 per cent of gross income, a rise of 17 per cent.

Average monthly mortgage payments - based on a 25-year repayment mortgage at the standard variable rate – are now just under £735, some 78 per cent higher than in 2003/04 - driven by higher interest rates than five years ago and a significant increase in the size of a typical mortgage.

Petrol costs are up 29.4 per cent to £193.61 and gas and electricity bills are 110 per cent higher to £95.80.

Debt repayments rose 44 per cent and council tax bills were up 25 per cent.

However, there were some price falls.

The costs of running a car has declined since 2006 – as tyre costs and servicing charges fell – and telephone bills fell.

Mr Gordon said: “All consumers are painfully aware of the huge hikes in petrol and utility bills but we’ve also seen some fairly hefty price increases in pension contributions and debt repayments.”

“If we go one step further and factor in food price inflation, which official figures have placed at 8.7 per cent in the last year, it’s clear that household budgets are under enormous strain."

He added: "Add in the impact of falling house prices on the consumer’s propensity to spend, and the consumer economy is undoubtedly on a knife-edge.

“Worryingly, though, the worst could be yet to come. If, as predicted, utility prices rise by as much as 40 per cent later this year and interest rates are increased to control rising inflation, consumers and consumer facing businesses will face even bleaker times."

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