Posted by Deanna Hurst, Partner
‘Family wealth under continued pressure’
An article entitled “Families just £1 richer than in 2004” in today’s City AM newspaper caught my eye. It was reporting on a Westminster Think Tank presentation today that shows the average household’s weekly income measured £682 in 2004-2005 and just £683 in 2009-10 in numbers adjusted for inflation. Sir Mervyn King, Governor of the Bank of England, suggested in the article that we are presently experiencing the biggest income squeeze on families since the 1920s.
With inflation running at 4.5% in the UK (compared to Europe at 3.2%) – whilst the target is 2% – things are hardly likely to get better in the short term.
And on the assets front things are barely much better – despite interest rates being held at their lowest level (0.5%) for some time one of the main barometers of UK wealth – house prices – remains stubbornly low. Recent reports show mortgage approvals are running at half of pre-crisis levels and unsold homes are piling up. Meanwhile, property values fell 4.2% in the three months to May 2011 compared to the same period in 2010.
This means that increasingly families are looking at short term financial survival over their long term family wealth and prosperity. Worrying times indeed.
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