High cost of living is dragging down economy

The high cost of living is dragging down economic performance in the UK, according to the Trades Union Congress (TUC).

In particular the nation's poor – those most in need of debt management – are being hit the hardest, the organisation claims.

The TUC has claimed that the poorest ten per cent of households saw the cost of living climb by 4.1 per cent in March – eight times faster than average growth in weekly earnings, which rose by just 0.5 per cent during the same period.

As a result, the TUC notes, in real terms, wages fell by 3.6 per cent – the joint-largest fall seen in the past two years.

The main driver of growth in living costs were utility bills. The TUC pointed out that utilities – including gas, electricity, water and fuel – accounted for a quarter of low income families' expenditure.

For wealthier households, the biggest expenditure was travel.

Commenting on the dire economic situation, TUC general secretary Brendan Barber said: "Everyone has been getting poorer month-on-month for the last two years. But poorer families have been hit particularly hard by soaring food costs and utility bills.

"This squeeze on living standards is putting a terrible strain on family incomes and is dragging our economy down too."

Mr Barber claimed that the government needs to rethink its "growth-choking" austerity and avoid making jobs even less secure by overhauling employment law and making it easier for firms to fire workers.

The last time that wage growth was in positive territory, according to the TUC was back in April 2010, when it reached 0.4 per cent.

Lloyds TSB published a report this week showing that disposable income fell by 0.9 per cent in April – making debt consolidation increasingly tricky for individuals trying to pay off an unsecured loan and avoid bankruptcy.

Posted by Amy White