UMERS are suffering at record rates, despite the small fall in inflation, according to separate pieces of research published today by Markit and Lloyds TSB.
The Bank of England’s quarterly bulletin also identified ongoing falls in the standard of living.
Spending power fell at its fastest rate this year in November, according to Lloyds TSB. Incomes grew by 1.9 per cent while spending on essentials rose by 3.9 per cent. Such a gap means spending power has fallen by 1.8 per cent, Lloyds believes, or £20 per month for discretionary spending.
Meanwhile Markit’s data showed real incomes in December fell at their fastest rate since March 2009.
Those earning under £15,000 per year were hit the hardest, and average incomes fell three per cent over the year after inflation is accounted for.
“Things are expected to get worse before they get better, with more than twice as many households downbeat about their financial prospects for 2012 as those that foresee an improvement,” warned Markit’s Tim Moore.
The Bank of England’s quarterly bulletin showed 16 per cent of households are working longer hours or taking on second jobs to pay bills and debts, while 49 per cent are cutting spending and 14 per cent are using savings.
However, these figures are all slightly lower than those in 2010, with fewer households struggling with unsecured debts – though that level remains above pre-recession peaks.
Banks are also helping ease the burden on debtors, with 12 per cent of those with a mortgage benefiting from some kind of forbearance like lower interest payments.
Without such help, 29 per cent of mortgagors receiving help and 49 per cent of those with unsecured debts would have been in arrears.