The rate of increase in the cost of living has outstripped wage inflation to leave Britons worse off than any previous time in the last fives years, a new study from accountancy firm Ernst & Young has found.
In fact UK citizens are on average 10% worse off compared to half a decade ago, the firm has concluded.
While wages have increased, the cost of living has increased at a quicker rate, leaving cash in pockets and money in the bank covering less than in 2002/2003.
Major factors involved in the impoverishing of the nation are intimately linked to the government, as general taxes have increased above inflation, while taxes on cars (road tax and petrol tax) have also gone up.
Meanwhile, general global energy prices have also taken their toll. Petrol has also increased due to the soaring cost of oil, while domestic energy bills have also dramatically risen due to the oil factor, in conjunction with gas market volatility and supply issues. Most of the UK’s leading power providers have increased their tariffs multiple times over the last 18 months, with the latest round involving double digit percentage rises virtually across the board.
An unrelenting housing market has also played its part. House price inflation over the last five years has continued at double digit annual rates in some areas, while the UK’s total mortgage burden has recently topped GBP1 trillion for the first time.
As a result, Ernst & Young is concerned for the UK economy in general. The increased cost of living has reduced disposable income and therefore has put pressure on the consumer sector.