UK Earnings Gap

Real earnings now are at their lowest for ten years. Rising interest rates are making mortgages dearer and more and more families are now caught between rising mortgage repayments and lower earnings. This is expected to get worse with London’s average house prices likely to rise to £500,000 in five years.



The current London house price is now £338,950 this has risen by 16% over twelve months. Nationally this rose 9% to £181,039.

Householders are apparently continuing to spend freely with a 3% rise in consumer spending over the past three months. This is expected to slow next year as consumers feel the bite of their household expenses.

To avoid getting caught by rising prices it has been suggested that people should write down all necessary expenditures and find where money is being wasted with emphasis on credit cards. The country has personal debts of £1,325bn of which £54bn is on credit cards. Many will pay off their mortgages before their credit card bill.

Consolidationg all debts can back fire and three out of five people just borrow again adding to their expenses.

Committee Split over points cut.

The Monetary Policy Committee was in agreement and backed the base rate reduction but one member called for a 0.5% cut.

February’s meeting minutes of the Monetary Policy Committee noted eight of the committee voted for 25 points reduction.

The report also stated that although levels were at 2.2% close to the target of 2% the committee was worried that energy and food price rises could cause it to dramatically rise in the next few months. It went on to state that the slowing of activity would decrease in the medium term to below the target figures. The Bank Rate could not iron out all the ups and downs of the output growth.