Decreasing disposable income hits financial commitments

Lisa Taylor from moneyfacts.co.uk said that with the interest rate rising, many people with debt are going to be hit harder.

“Recent economic signs do not paint a very rosy picture for UK consumers, with rising bad debts, unemployment levels, unsecured debt levels at an all time high and predictions of a further rate increase before the end of 2006,” warned Ms Taylor.

Her comments come as LloydsTSB, HSBC, Barclays and HBOS all report massive increases in levels of bad debt.

Yet Ms Taylor fears that worse is to come as the price of fuel rises heavily which she believes will see “more consumers struggle to manage to meet their financial commitments”.

Just last month Ernst & Young concluded that the average household has ten per cent less disposable income than in 2001 due to rising debt, bills and taxes.