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Financial pressure on households 'will not decrease in near future'

Pressure on families is not going to decrease soon, an expert has said.

Author: Sam Gooch
Date: Feb 8, 2011 - 8:02:06 AM

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Pressure on families is not going to decrease soon, an expert has said.

Increased levels of pressure on personal finance options such as current accounts and credit cards will not improve significantly in the near future due to several factors, an expert has said.

According to Mark Bower, managing director of online resource Money Maxim, issues such as the rise in VAT from 17.5 per cent to 20 per cent - which was confirmed on January 4th 2011 - and the ongoing effects of the government's spending cuts will serve to impact on the financial wellbeing of families up and down the country.

Since coming to power following the general election in May last year, the Conservative-Liberal Democrat alliance has pledged to knock billions of pounds off the UK's public spending bill as the nation attempts to recover following the global economic downturn.

This may mean that consumers should consider trying to put more of their income into savings accounts in order to provide some security for their future, but Mr Bower suggested that this may prove difficult because the tightening of credit has put additional pressure on household expenditure.

"As food, utility and other household bills have recently increased month-on-month those without a savings base have found themselves living from day to day and even less able to save for larger bills or purchases even in the short term," he explained.

The expert was speaking after research by the Co-operative and Shelter published earlier this week (January 25th 2011) showed that nearly 28 per cent of Brits are having to spend more money each month than they have coming in.

Mr Bower added: "In the past they probably relied on credit, but with that both more expensive and in shorter supply, that has made smoothing the annual budget across the year more challenging."

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View all articles by Sam Gooch

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