Lowest earners face squeeze until 2020
A new report by think tank the Resolution Foundation says that lower earnings and higher inflation between 2015 and 2020, combined with the benefits freeze, is likely to mean the bottom third of earners in the UK will see their earnings fall.
It’s a prediction being echoed from experts elsewhere, with the Institute for Fiscal Studies predicting that real-term wages will be lower in 2021 than in 2008, but the question remains: what can we do about it?
The predictions accompany the Chancellor’s Autumn Statement, in which worse-than-expected government finances sparked renewed plans for austerity.
While Mr. Hammond has promised to increase the National Living Wage from £7.20 per hour to £7.50, to reduce the ‘taper rate’ of universal credit to 63% and to avoid new cuts to the benefits system, it’s the high inflation and low earnings growth that is the focus of much of the gloom.
For those with savings, the announcement of a new savings bond offering interest of 2.2% on up to £3,000 will be welcome news. Available from April 2017, this could be an option for keeping cash safe.
Those with a mortgage may also want to consider overpaying while rates are low. The latest stats show lenders are set to increase their rates as changes in the global markets hit home. If you can’t overpay, consider switching providers. Research by Trussle and YouGov suggests there are potential savings of up to £2,800 per year to be found.
In the long term, many commentators also think pension tax relief is next for the chop. So taking advantage and putting aside money for your retirement might be a wise move.
Managing your money
However, for those of you who are just-about-managing there needs to be renewed focus on the options available when you can’t pay your basic bills.
Planning ahead with things like the Citizens Advice budgeting tool, and making sure you know your debt priorities in order to protect your home and keep you out of court, can help you manage in the tough times. But if you find yourself struggling to pay your bills, don’t be afraid to speak to your creditors or seek free, confidential advice from an independent advisor. You’d be surprised how many options you have available.
If you’re struggling with your finances and need advice from professionals, don’t hesitate to get in touch with Dukes Bailiffs. Our customer service operators are here to show you how you can manage what you owe.