Thursday 4th of August 2011
Families £7,500 worse off over the next 5 years
Yesterday’s comprehensive report by the International Monetary Fund (the IMF) has warned that UK families will be £1,500 per year worse off and that this will continue until at least 2016.
This sizeable amount of money is predominantly made up of higher taxes (such as the 2.5% increase in VAT from 17.5% to 20%) and lower benefit payments (for example, the abolition of the Child Trust Fund) which have been introduced by the Coalition Government since coming to power last year.
This action has been taken in an attempt to reduce the massive financial deficit which the country as a whole is currently faced with. The total impact of this austerity drive on the UK’s families is that they will be worse off to the tune of £35 billion. This represents a reduction of between 3% - 4% compared to last year’s total disposable income.
The IMF also raised concerns about the level of personal debt in the UK and the effect this could have on any recovery. The significance here is that if/when the Bank of England feel it’s necessary to begin to raise interest rates, that they should do so progressively so as to minimise the effect this would have on monthly debt repayments.
Irrespective of the above, the IMF’s analysis also reported that house prices would continue to fall in real terms. The net effect being that people’s houses would be worth 12% less by 2016 compared to their current values.
Oh yes, and we’ve also run out of coffee!
By Matt Clayton
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- IVA advice could help parents tackle debt
