British households continue to be financially squeezed

| April 11, 2011 | 0 Comments

Influential think tank, the Centre for Economics and Business Research (CEBR), has said higher inflation and low pay rises means British households face their biggest squeeze since 1921.

The report suggests a typical British family will have £910 less to spend this year than they did in 2009 due to higher food and energy prices and that household disposable income is at its lowest in 90 years.

According to the CEBR, inflation will hover around the 3.9% mark this year - a 19-year high, while the recent hike in VAT will impact on household disposable income.

The Centre anticipates that disposable incomes will fall 2% in 2011, following a 0.8% decline in 2010.

Salaries are growing by just 1.9% as unemployment continues to climb and the public sector experiences massive job losses.

As a result of the drop in household income, consumers will spending less and this is expected to hamper economic growth.

The CEBR is forecasting that the economy will grow by just 1% this year and will remain “subdued” for the next two or three years.

The prediction is far less than the 1.7% predicted by the Office for Budget Responsibility.

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