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'Triple crunch' will see lower middle class £720 a year worse off

amcluesent
Posts: 9,425 Forumite
Millions of lower middle-class families will face a "personal recession" next year that will leave them worse off by an average of £720 thanks to government cuts, rising inflation and stagnating pay, a landmark report says.
The study, produced by the independent Resolution Foundation, looks at the 11m households who earn between £12,000 and £30,000 a year and who crucially do not rely heavily on means-tested support from the state.
In Squeezed Britain, researchers find that families will see their wages fall in real terms on average by almost 4% over the next year as "major cuts overlap with a fragile jobs market". Gavin Kelly, chief executive of Resolution Foundation, said that millions "who already sit on the edge of downturn face a triple crunch".
FACT - Start saving now, you'll have the deposit for the house in 2062
While the foundation welcomes the coalition government's increased tax allowances and lowered national insurance thresholds for lower income families – which will put £340 into their pockets – this is wiped out as childcare support is cut and plans to reduce spending on tax-credits by £6.2bn in the period to 2014/15 begin to take hold.
These cuts coupled with the fact that the incomes of the lower middle class rise more slowly than the rich, and that their spending power is eroded by fast-rising fuel and food costs, mean that they are losing ground rapidly.
Measured in real terms, the report says that lower and middle-income household incomes increased by just under one third between 1977 and 2009, compared with a doubling among higher earner households.
FACT - Just the start of the pauperisation of Britain as wealth flows East for good and England faces up to grim, grey, grinding decades of austerity, want, hunger, cold and "making do".
The study, produced by the independent Resolution Foundation, looks at the 11m households who earn between £12,000 and £30,000 a year and who crucially do not rely heavily on means-tested support from the state.
In Squeezed Britain, researchers find that families will see their wages fall in real terms on average by almost 4% over the next year as "major cuts overlap with a fragile jobs market". Gavin Kelly, chief executive of Resolution Foundation, said that millions "who already sit on the edge of downturn face a triple crunch".
FACT - Start saving now, you'll have the deposit for the house in 2062
While the foundation welcomes the coalition government's increased tax allowances and lowered national insurance thresholds for lower income families – which will put £340 into their pockets – this is wiped out as childcare support is cut and plans to reduce spending on tax-credits by £6.2bn in the period to 2014/15 begin to take hold.
These cuts coupled with the fact that the incomes of the lower middle class rise more slowly than the rich, and that their spending power is eroded by fast-rising fuel and food costs, mean that they are losing ground rapidly.
Measured in real terms, the report says that lower and middle-income household incomes increased by just under one third between 1977 and 2009, compared with a doubling among higher earner households.
FACT - Just the start of the pauperisation of Britain as wealth flows East for good and England faces up to grim, grey, grinding decades of austerity, want, hunger, cold and "making do".
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Comments
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I made it £723.47"It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0
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£12K household income would make you lower middle class!
That is a very low income to run a home IMHO. You certainly would not feel middle class on that.0 -
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Right, so the most affluent in our society (which pays out more in benefits than it receives through employees PAYE so has a completely unsustainable balance) are worse off by £2 a day?
Perhaps their personal income dips by (as a guess) by around 0.5% to perhaps 4% of their household income?
And we are supposed to outraged by this?0 -
amcluesent wrote: »FACT - Just the start of the pauperisation of Britain as wealth flows East for good and England faces up to grim, grey, grinding decades of austerity, want, hunger, cold and "making do".
I didnt realise £750 would make such a difference! Want, cold and hunger indeed! :eek:0 -
Id way anyone working up the 40% bracket, is Working Class or Tradesmen.
40% tax bracket + especially double earners, and your into middle class territory!
50% tax bracket and your moving along very nicely!Plan
1) Get most competitive Lifetime Mortgage (Done)
2) Make healthy savings, spend wisely (Doing)
3) Ensure healthy pension fund - (Doing)
4) Ensure house is nice, suitable, safe, and located - (Done)
5) Keep everyone happy, healthy and entertained (Done, Doing, Going to do)0 -
Objectives of Resolution Foundation:
We work to highlight the experiences of low-to-middle earners (LMEs) through our research and improve outcomes for them through our policy proposals. We produce economic and quantitative analysis as well as conducting our own qualitative research. We work closely with Government as well as partners in the private and third sectors to achieve our goals. Here you can read more about what we’re currently working on.
Not sure this is the same as "Lower Middle Class".
Why there should be a lobby group for this group I don't really know. As is obvious, the relative affluence of different groups changes significantly over time. It intrigues me that you very seldom hear of similar reports that say "Single parent households see benefits increases of twice national average..." etc. Only when things decline from their current position do people gripe.
Even when a politician (Old Lord Young) pinpoints a group [Employed existing mortgage holders] to say - probably with some truth - "You've never had it so good..." he gets fired down.
Think of poor old Freddie Goodwin. I bet the changes are costing him a bit more than £720 a year, and he is possibly under threat of having his heating allowance removed, and state pension heavily eroded in value before he reaches state pension age. Think we should have a whip round for him.0 -
'Triple crunch' will see lower middle class £720 a year worse off
It would be interesting to see what the effect of these changes will be on families in the Upper Lower Middle Class, and also those in the Lower Upper Middle Class, and if anyone has the time to do the calculations, on the Lower Middle Upper Middle Classes too. :eek:'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
It would be interesting to see what the effect of these changes will be on families in the Upper Lower Middle Class, and also those in the Lower Upper Middle Class, and if anyone has the time to do the calculations, on the Lower Middle Upper Middle Classes too. :eek:It's getting harder & harder to keep the government in the manner to which they have become accustomed.0
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Dunno, but I would love to see what the equivalent interest rate rise would need to be to drain 720 smackers from someones pocket.
Anyone thinking rates are going up to squash CPI are delluded, at least till 2014-2015.
Its going to be painful and things are going to be tighter than a tight thing for the forseeable. House price drops, rationed mortgages here we come.0
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