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Realistbear

Guardian: Rising Bills Erode Disposable Income

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http://money.guardian.co.uk/utilities/stor...1809993,00.html

Rising bills erode disposable income

Staff and agencies

Friday June 30, 2006

The amount of money UK households have left to spend after paying the bills has fallen by 10% over the past four years as increasing fuel prices and mortgage rates have started to take their toll, figures showed today.
The typical family with two children aged under 16 has seen their level of disposable income fall by an average of £82 a month since 2002/03, according to accountants Ernst & Young.
It said the fixed monthly costs associated with running a household had outstripped wage inflation,
rising by more than 30%
since the 2002/03 tax year, to account for 71% of take-home pay, compared with 64% four years ago.
As a result, the group said the average household was now worse off than at any time during the previous five years.
After paying tax and national insurance, the typical family has a monthly income of £2,640.82, up from £2,281.57 in 2002/03.
But people's fixed monthly outgoings have also increased to account for £1,897 of their pay, leaving them just £743 for discretionary spending each month, down from £826 four years earlier.
The main factor behind the drop in disposable income is a rise in the cost of
mortgage repayments, which have nearly doubled
from an average of £364 four years ago to £604 this year.
This reflects rising house prices, which have pushed up a typical mortgage from £70,000 in the second quarter of 2002 to £112,100
in the first three months of this year, according to Council of Mortgage Lenders figures.
At the same time,
rising gas prices have driven utility bills up by nearly 40%
to £88.72 a month.
The average family now spends £168 a month on petrol, up from £125 four years ago
; £93 on debt repayments, up from £74; and £302 on pension contributions, £50 more than in 2002/03.
Monthly council tax bills have also increased by 30%
to average £105.66, while the cost of running a car now averages £111 a month, up from £80 in 2002/03.
Tim Sleep, director of retail at Ernst & Young, said: "Increases in average mortgage payments, coupled with rising fuel prices and massive hikes in utility prices, continue to squeeze the typical household.
"Many consumers are shackled by these constant increases in fixed monthly outgoings. Consequently, discretionary spending power continues to decline and consumers are simply not in a position to spend freely."
Figures from the Bank of England yesterday showed that the collective mortgage debt of UK households had topped £1 trillion for the first time.
Separate figures from Nationwide building society revealed that mortgage payments now account for 42% of the average worker's earnings, up from 32% three years ago
.
Some experts have warned of the problems that could face borrowers if interest rates rises, as expected, later this year.
Geoff Tresman, an IFA from Punter Southall Financial Management, said yesterday: "The rise in mortgage lending illustrates a growing confidence in the economy and in particular the housing market, which in itself is built upon a belief that interest rates are going to remain low.
"The negative is that in the macroeconomic world, higher interest rates are being predicted worldwide. Borrowers who ignore the warning signs and overstretch themselves could do so at their own peril
."

The definition of inflation must be covered by the headline? Of course, none of the items highlighted above are considered in Gordon's basket so we have no inflation. It is utterly amazing that Gordon has got away with it and how the world still sees the UK economy as viable with a grossly over-valued pound. Amazing!

Edited by Realistbear

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I read a copy of the Daily Facist today. In my defence this was because my broadsheet wasn't available, so it was that or the Daily Sport. It made interesting reading though: Frank Field item about unsustainable immigration and also the BoE rift. What's interesting is the fact that these topics are becoming more and more frequent.

The 42% figure struck me as unusually high. If this is an average there must be a few people out there hanging on by the skin of their teeth. Any idea who makes Prozac because the share price should rocket with a rise in the rates!

Whoops, wrong thread - this just shows how disturbed the article has made me!!!!

Edited by Xurbia

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I read a copy of the Daily Facist today. In my defence this was because my broadsheet wasn't available, so it was that or the Daily Sport. It made interesting reading though: Frank Field item about unsustainable immigration and also the BoE rift. What's interesting is the fact that these topics are becoming more and more frequent.

The 42% figure struck me as unusually high. If this is an average there must be a few people out there hanging on by the skin of their teeth. Any idea who makes Prozac because the share price should rocket with a rise in the rates!

Whoops, wrong thread - this just shows how disturbed the article has made me!!!!

Funny you should mention that, seems 50% of women in the UK have been on them so quite a few are not so happy living in a miracle economy of HPI and crippling debt:

http://observer.guardian.co.uk/focus/story...1194292,00.html

Why millions of women are hooked on the happy pills

British GPs are prescribing drugs for depression in unprecedented quantities. But is this really the best cure? Luisa Dilner reports

Sunday April 18, 2004

The Observer

Death and taxes used to be the only certainties in life. For British women, we can now add another one: depression. Statistics may show that one in four women becomes depressed at some time, but a magazine survey this week claims that
more than half of British women have taken antidepressants.
Rising house prices hav

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Funny you should mention that, seems 50% of women in the UK have been on them so quite a few are not so happy living in a miracle economy of HPI and crippling debt:

http://observer.guardian.co.uk/focus/story...1194292,00.html

Why millions of women are hooked on the happy pills

I think there are a lot of people out there who cannot see any escape routes. When you want that house, the car and the Burberry cap it doesn't seem that much of a worry to finance yourself to the eyeballs. Life has always been a struggle but there are a lot of people who've never understood the reality of debt.

Perhaps recessions are a good thing because they stop the financial rot with a big explosion. This trickle of debt is maybe harder to deal with?

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Anyone else having difficulty adding those up to the number they are talking about :huh:

The people are shell-shocked. Reeling from fantastic increases in fuel costs and housing there is a despondency and inability to come to terms with reality. A malaise or corporate depression is spreading and the only relief is the desperate spending of money on more tat to bring fleeting moments of joy. How long does the euphoria of a new 1000 pound LCD last? Especially when you realise the picture quality is worse than the old colour telly you bought 15 years ago.

The spread of depression and anxiety is a symptom of a miracle economy gone horribly wrong. Everywhere there are stories of human tragedy in the form of repossession or layoffs from the latest manufacturing victim. Young people are losing their zeal as the hopelessness of HPI clouds there every waking moment. The great hope and expectations promised by Gordon Brown have turned from a dream of endless spending based on endless HPI into a threatening financial disaster that moves closer and closer to the edge as each billion is added to the monstrous 1.2 trillion of personal debt.

The numbers do not add up because they are meaningless. The government have messed up and they are trying to cover their tracks.

Edited by Realistbear

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After paying tax and national insurance, the typical family has a monthly income of £2,640.82, up from £2,281.57 in 2002/03.

So an extra 360 odd.

But people's fixed monthly outgoings have also increased to account for £1,897 of their pay, leaving them just £743 for discretionary spending each month, down from £826 four years earlier.

ie before they spent £1455 now they spend £1900

So wages have increased by £360 but costs have rocketed by £450.

Of which

240 is mortgage

25 is gas

43 is petrol

19 is debt

50 is pensions

24 is council tax

31 is car

Totalling: 430 ish.

Ok so the numbers do add up.

All they had to do was lay it out sensibly ffs and say that costs have increased 50% more rapidly than income. :huh:

Almost entirely attributable to tax by the look of it!

Edited by RichB

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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