Accountants, PricewaterhouseCoopers have released figures today that indicate the largest drop in income for a generation, for those considered middle class in the UK. And this is set to take place in 2010.
Taking into account forecasted increases in mortgages and tax, a family on an annual income of £30000 will find themselves approximately £6 a week worse off – or £300 worse off over the course of the year.
The wealthier are also expected to suffer, by around £5000 per year.
So while the forecasted recovery of the economy is certainly a good thing on a global level, it could see some short term belt tightening and potential debt problems for consumers in the UK. As well as tax rises, a freeze in the tax free personal allowance (as announced in the pre-budget report), petrol rises and general increases in the cost of living, those on above average incomes are expected to feel the pinch.
Financial experts are advising the well off to make the most of the incredibly low current interest rate to get as much of their mortgages paid off as is possible, as the repayments will certainly rise in line with the economic recovery in the UK.
January 2010 will also see the VAT rate return to 17.5%, following 12 months at a 15% rate, which was designed to stimulate consumer spending.