Finances ‘facing biggest squeeze since 1921’

Britons are facing their biggest peacetime loss of income in real terms since 1921, it has been revealed, something that could increase the pressure on those in debt.

A study by the Centre for Economics and Business Research (CEBR) has concluded 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.

The report said 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.

Per household, this amounts to £910 a year and such a figure may make it harder still for those wishing to become debt free to achieve this.

Not since 1921 has the situation been worse in peacetime, although the loss of wealth was greater in WWII, when the entire economy was geared towards fighting against Hitler.

It means Britons are feeling the pinch even more than during the Great Depression of the 1930s.

Those who have credit card debt could find the best way to tackle the problem is to take on a loan that charges a lower rate of interest, reducing monthly outgoings.

In 1921 Britain also had a coalition government between Conservatives and Liberals, the latter being a part of the party led by prime minister David Lloyd George, who had helped split his party when replacing Herbert Asquith in No 10 in 1916.

Having won the war, he had continued the wartime coalition with the Conservatives through the 1918 election and beyond, pledging to create a “land fit for heroes”, but was turfed out of office by his coalition partners in 1922.

By James Francis