Biggest Loss Of Income Since 1921

A study by the Centre for Economics and Business Research (CEBR) has found that there was a 0.8 per cent fall in wealth when set against inflation last year and 2011 will see a two per cent drop.

This shows that public spending cuts are only having a small effect on spending power, whereas high inflation and low pay settlements are having a major effect, the net result of which is households having their disposable income lowered by a collective £27.3 billion.

These are the figures that the government is not acknowledging and it's only by research like this that we are being made aware of the full impact and the outlook of things to come.

This amounts to approx £910 a year on average per household, and such a figure may make it harder still for those wishing to become debt free to achieve this. Something which advisors at Integrity are extremely worried about and are advising people to deal with the problem now before the situation gets worse.

This is the worse the situation has been since 1921 and has certainly set alarm bells ringing.

In comparison in does mean that the UK is feeling the pinch more than the Great Depression of the 1930s.

It has already been commented on that those who have credit card debt may find the best way to tackle the problem is to take on a loan that charges a lower rate of interest, reducing monthly outgoings. However advisors at Integrity have warned against this as it could be a pathway to even deeper debts with lenders raising interest and charges to compensate.

In 1921 when we last saw a situation the same as this, we had a coalition government run by the Conservatives and Liberal's. The leader of that government was forced out of office in 1922 with his head hung in shame.

On that note we will leave it up to you to think about what really could happen to personal finance in the UK…