Print

E&Y: The worst is still to come

A new study has revealed the true extent of the problems being faced by UK householders as a result of the credit crunch.

According to the firm, people across the UK are 15% worse off than they were five years ago following the recent big rises in the cost of living.

And after paying tax and meeting monthly household bills, the average family now has less than 20% of their gross income left, compared with 28% in 2003/2004,

The study further found that:

- Fixed monthly household costs had soared by nearly 45% during the past five years.

- These costs now take up 53% of people's total pay.

- Homeowners are shelling out 78% more in mortgage repayments than in 2003/2004 at an average of £735 a month, due to a combination of higher interest rates and people taking out bigger mortgages.

- Monthly energy bills have leapt by 110% during the period to average £95.80.

- Petrol costs for the typical family are 29% higher at £193.61.

- Loans, credit cards and overdrafts have risen by 44% since 2003/2004 to take up £114.81 of people's income.

- Council tax is 25% higher at an average of around £114.50.

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

"Households are left with an average of only £772.79 to spend each month after paying all of their fixed monthly outgoings - down from £909.84 in 2003.

"The squeeze on people's disposable income has accelerated rapidly over the past year".

Mr Gordon rather ominously concluded: "The worst could still be to come, with utility prices expected to rise by up to 40% this year, while interest rates could also increase to control inflation".