Household discretionary income ‘is not increasing’

Disposable income for the typical family is not going up despite a recent report suggesting the contrary, one expert has suggested.

Director at financial organisation the Motley Fool David Kuo said that a study by Ernst & Young revealing the average household discretionary income had risen by £200 a month from 2008 was misleading.

He said: “When you look at something like ‘average’ you will have some people … benefiting from huge amounts of higher disposable income and then … some people will have no increase.”

Much of the additional income is from mortgage interest repayments that have decreased since rates have been put down, he added.

Mr Kuo commented that this means those with tracker rate deals will have experienced disproportionate gains compared to people on a fixed-rate mortgage.

Ernst & Young’s report found that disposable income had gone up 25 per cent from last year, with the average household having £1,075.22 after fixed outgoings were calculated.

By Francis Finch

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