UK '15% worse off than in 2003'

4 July 2008 12:09am

Britons are 15% worse off than they were five years ago following massive hikes in the cost of living, research shows.

After paying tax and meeting monthly household bills, the average family now has less than 20% of their gross income left, compared with 28% in 2003/2004, according to accountants Ernst & Young.

The group said households were left with an average of only £772.79 to spend each month after paying all of their fixed monthly outgoings, down from £909.84 five years earlier.

It added that the squeeze on people's disposable income had accelerated rapidly over the past year.

Jason Gordon, director of retail at Ernst & Young, said: "Many UK consumer segments are clearly feeling the pinch as big rises in household costs are far outstripping relatively modest wage inflation."

The group found that fixed monthly household costs had soared by nearly 45% during the past five years, to take up 53% of people's total pay.

Homeowners are shelling out 78% more in mortgage repayments than in 2003/2004 at an average of £735 a month, due to a combination of higher interest rates and people taking out bigger mortgages.

Monthly energy bills have leapt by 110% during the period to average £95.80, while petrol costs for the typical family are 29% higher at £193.61.

Other costs have also increased, with unsecured debt repayments, such as on loans, credit cards and overdrafts, rising by 44% since 2003/2004 to take up £114.81 of people's income, while council tax is 25% higher at around £114.50.

People are also now typically contributing £255.20 into a defined benefit pension each month, up from £144.26 five years ago.

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