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Households now 15% worse off, says E&Y

The average UK household is now 15 per cent worse off than it was five years ago, according to Ernst & Young’s Annual Discretionary Income Study.

After tax contributions and monthly household bills, the average family now has under 20 per cent of its gross income left over, as opposed to 28 per cent in 2003.

Fixed monthly household costs have risen by almost 45 per cent since 2003/04 and now account for 53 per cent of a typical household’s gross income, compared with 45 per cent in 2003/04.

Average monthly mortgage payments are now 78 per cent higher than in 2003/04 at just under £735.

Ernst & Young director of retail Jason Gordon says: “Many UK consumer segments are clearly feeling the pinch as big rises in household costs are far outstripping relatively modest wage inflation.

“Worryingly, though, the worst could be yet to come. If, as predicted, utility prices rise by as much as 40 per cent later this year and interest rates are increased to control rising inflation, consumers and consumer facing businesses will face even bleaker times.”

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