Families suffer £552 blow to disposable income, Bank reveals
Workers are putting in longer hours and taking second jobs to cope, says Bank of England
Monday 19 December 2011
Austerity Britain was laid bare today as the Bank of England revealed a picture of families suffering a huge loss of spending power and taking on second jobs to make ends meet.
Families have been hit with an average £552 fall in disposable income over the past year, according to the Bank's survey of 2,000 households. Workers in about half of all households surveyed by the Bank are putting in longer hours or taking on second jobs as a result of the income squeeze.
But things will get worse as the Chancellor George Osborne's spending cuts bite. "Fiscal consolidation is expected to have more of an impact in future than it has had over the past year," the Bank's latest quarterly report said.
"The main responses that households had taken was through the labour market ... the most common actions were to cut back on spending, work longer hours or take on a second job." The responses chime with official figures that revealed falling employment levels but a surprise 150,000 rise in total workforce jobs – signalling that people are taking on more part-time work and second jobs to pay the bills. Nearly a quarter of households had "no idea" what their income would be in a year while about a third were less certain about the state of their finances than a year ago.
The Bank's gloomy survey comes at the end of the worst year for Britain's household finances since the Second World War, with the Office for Budget Responsibility forecasting a record 2.3 per cent slide in disposable incomes.
At 4.8 per cent, the cost of living is far outstripping average wage growth of just 1.8 per cent, according to official figures. Leading economists are queuing up to predict a renewed slump in the UK, while the Bank believes that growth will be flat at best until the middle of next year. More than one in 10 households have struggled to pay housing costs during the past 12 months, although renters have suffered a bigger blow than owner-occupiers cushioned by rock-bottom interest rates.
A softer line on debts from lenders is easing the pressure on one in 10 mortgagees, although the soaring price of household bills and food is heaping financial pressure on the most hard-pressed families.
The report warned: "Some households were finding that they could not save as much due to lower income or the higher cost of essentials."
The Bank expects inflation to fall back sharply from its current high early next year as the impact of last January's VAT rise and energy-price increases recede. But consumer confidence is still low, feeding into declining high street sales and sapping the confidence of businesses to invest as a double-dip recession looms.
- 1 Qataris pledge to expand Canary Wharf
- 2 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 3 Women think Irish men are the sexiest, survey finds
- 4 Florida couple forced to register as sex offenders for having sex on public beach
- 5 Watch eerie drone footage of destroyed building in Stalingrad
#JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
Florida couple forced to register as sex offenders for having sex on public beach
UK election candidates: 'Nasty party' Ukip faces fresh questions on eve of vote
Who should I vote for in the general election? Take The Independent's interactive quiz to find out which party's the right choice for you
Ohio 'Shawshank Redemption' fugitive Frank Freshwater arrested after 56 years on the run
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
General Election 2015: Sturgeon claims Scots 'appalled' by Ed Miliband's refusal to work with SNP
£35000 - £40000 per annum + car and benefits: Ashdown Group: Marketing Manager...
£18000 - £20000 per annum: Ashdown Group: Helpdesk Analyst - Devon - £20,000 ...
£35000 - £50000 per annum + generous bonus: Ashdown Group: Business Analytics ...
£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...