Financial pressure on UK households is unlikely to show any signs of abatement in the near future, one expert has recently stated.
Families are finding their personal finance options such as credit cards and current accounts stretched to the limit. Money Maxim managing director Mark Bower predicts no significant improvements anytime soon.
According to the online resource manager, the 2.5 per cent rise in VAT that went into effect early this past January will have a measurable impact on the financial health of households throughout the length and breadth of the UK. Additionally the spending cuts instituted by the government will further exacerbate the issue, said Mr Bower.
The Coalition government has made pledges to institute deep cuts in the country’s public spending bill since it came to power in last May’s general election. The Liberal Democrat-Conservative alliance has stated that the goals of the cuts are to facilitate economic recovery in the wake of the worldwide banking crisis and resultant global downturn.
This could lead to consumers investing more of their cash into savings accounts in an effort to begin rebuilding their rainy-day funds. However Mr Bower stated that due to the overall credit tightening currently gripping the country, additional pressure has been put on household expenditures.
Household bills such as utility and food have been steadily increasing, the managing director stated. As a result those households with no savings cushion have found it increasingly difficult to put money aside for more substantial purchases or bills in the long term. He also stated that in some instances even short-term spending has taken a back-seat as well.
To highlight his words, recently released research by Shelter and the Co-operative stated that almost 28 per cent of UK consumers are spending more money every month than they actually have coming in.