Poorest hit the hardest in 2011

Monday, March 21st, 2011 at 5:58 pm

When there’s a recession or times are hard, how come it’s always the poorest people in society that seem to be hit the hardest? Pensioners and other poor households in the UK are amongst those that have been hit the worst by the latest recession.

Due to loss of employment, Incomes in the UK have fallen during the recession. According to the IFS, The UK’s poorest households saw their real income fall by 2.1% between 2008 and 2011. UK Pensioners saw their average income fall 2.4% per annum,

The UK’s richest saw their real income fall by 3.8% during the period which is an annual fall of about £2,230.

Despite losing a bigger percentage of their income, the study found that the richest would be in the best place to cope with a drop in their income. On the flip side of the coin, working class families with children have seen their average income fall the least but this does not tell the true story as many of these people are already living on the bread line. This means that a smaller percentage drop when it comes income, means a lot more.

Families with children saw their real income fall 1.1% whereas families in the UK without children saw their real income fall 1.8%.

According to a well known debt help charity, middle-earning families are going to be pushed more into debt due to fewer tax credits, higher tax thresholds, and rising interest rates.

The Consumer Credit Counselling Service has said that vulnerable families will continue to face financial pain in the coming years. The charity found that UK Homeowners are going to be facing higher unsecured debts compared to those who rent a home.

A person who owned their own home had, on average, debts of more than £30,000. These debts were in addition to their outstanding mortgage.

More and more people in the UK are seeking debt advice. The typical person who came to the CCCS for debt advice was aged 42. Those who are in the most debt were aged between 50 and 59.

With interest rates likely to rise within the next couple of months, one can only imagine what affect this will have on the debt situation in the UK. Many people have been barely keeping their heads above water and the smallest of rises could mean that many more people will have unmanageable debt.