People are going to be tightening their belts in the coming months, according to a survey conducted by Learndirect, which also concluded that the majority of the public are having trouble managing their finances. Of 3,000 people responding, about half expect to have £25 less to spend per month than last year, and about a quarter expect to be £50 poorer. In addition, most people are confused about the economic situation and what it will mean to them personally.
What with government spending cuts, the recent rise to 20% in VAT, rising fuel costs, tight credit and jobs being cut in both the private and public sectors, the outlook is rather gloomy for the average householder. The Bank of England is still holding its rate at 0.5%, but the board is under pressure to start putting the rate back up to combat rising inflation, and the likelihood is that rates will go up in the next few months. While that move will be a relief for savers, it will put even more of a strain on borrowers.
The Consumer Prices Index, which is the main indicator used to measure inflation, rose by .03% in December, putting it at 4%, or double the Bank of England’s target of 2%. In the latest overview, B of E says they expect the rate to rise even more before it starts to level off.