New figures suggest that the latest slew of tax hikes and budget cuts will leave the average UK household around £1,400 out of pocket in 2011.
Along with the mentioned cuts and tax increases, extremely low pay rises are also to blame for the nation’s dwindling finances.
For some people the turmoil of the financial crisis has begun to wear off, and a semblance of financial stability was beginning to take shape, unfortunately the UK could be in for a rude awakening as the impact of recession and government cuts truly make their presence known with the heralding of the new tax year and its numerous cuts and tax increases.
Personal finance website Moneynet is behind the latest research and their results show that pay increases are currently at a rate of just 0.1 percent, the lowest rate since figures were first kept in 2004.
The impact of meagre pay rises have also been compounded by increased costs in the UK. The retail price index has showed that food and petrol prices have shot up by just under two percent in the last year, from 3.7 percent to 5.5 percent.
Moneynet spokesman Andrew Hagger said: “These are extremely testing times, particularly for people who haven’t had a sniff of a pay increase in the last couple of years or have seen their guaranteed overtime disappear. The situation is likely to get worse before it gets better, particularly with fuel prices rising on an almost weekly basis and the prospect of higher borrowing rates a distinct possibility.”
One of the big issues is the lowering of the high tax rate threshold .Under the new rules people who earn £42,475 or more will now have to pay the 40 percent tax rate, and it is estimated that 700,000 people will find themselves in the bracket due to the lower threshold.
On top of that there are also the VAT and National Insurance raises to contend with.
What this suggests is that predictions of the recession ending were wide off the mark, and sadly it seems that UK citizens have a lot of penny-pinching still to do.