A recent study that was conducted by the Centre for Policy Studies has shown that many families in the UK are still under considerable financial strain. Taxes, bills, and living costs have risen far more quickly than wages, and this has made it difficult for consumers to stretch their monthly income as far as it needs to go. The study showed that the average family is now paying around £8000 more in taxes than they were ten years ago around the time Labour first came back into power.

The report from the Centre for Policy Studies is aptly titled ‘Why Do We Feel So Broke?’. According to the data in the report consumers have had to put up with an array of rising costs since 2005, including mortgage repayments, energy price increases, higher food costs, increasing petrol costs, etc. However, in the same period increases on wages have stopped for many consumers, or have risen far more slowly than inflation on living costs.

Household finances have been put under immense strain over the past couple of years. The series of five interest rate hikes have resulted in some homeowners being unable to meet mortgage repayments, and this saw the level of repossession rocket by over 20% last year. Even when interest rates did start to fall, with one 0.25% cut in December, and a further one in February, other costs started to rise, such as the cost of energy usage.

The strain on household finances has affected both consumer confidence and consumer spending, and this has had a knock on effect on the economy over recent month. It is hoped that further interest rate cuts will help to ease financial problems and boost the economy, and a number of further rate cuts are expected for this year.

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