You've never had it so bad

Posted in 'Credit Crunch' by Barry Stamp

01 December 2011

The leading think tank, the Institute of Fiscal Studies, has today presented its analysis of this week’s Autumn Budget Statement with the conclusion that average incomes will drop by 7.4% between 2009 and 2013, ‘another record matched only by the falls seen between 1974 and 1977’ according to their spokesperson, Paul Johnson.

The cause is the gap between current inflation rates and capped income rises, and although some cynics may dismiss this as just one of a succession of gloomy statements from the IFS, this prediction has the credibility of us already being half way into the projection period.

What the IFS fails to add to balance its statement is that interest rates in the 1970’s were twice the current levels, and the savings that mortgage payers will be reaping now from extraordinarily low interest rates will more than compensate for a 7.4% drop in income – a 1% rise in mortgage rates broadly adds £1000 per year to the average mortgage. A return to 11% mortgages would really give consumers real cause for concern. Fingers crossed there, then, for lower interest rates to continue.

There’s no doubt that most of us will be feeling the pinch, but it’s always surprising to see that so many of us have yet to cash in on some obvious and significant savings that together could increase our disposable incomes by over £600 per year.

Changing energy suppliers by switching for the first time typically saves around £200 per year.

Moving your credit card balances using one of the really good 0% balance transfer deals available at the moment can typically save over £400 per year.

The IFS says you’ve never had it so bad, but most consumers have never had such good money saving offers available either.