Monday, January 08, 2007
In Britain most people have been able to forget about the problems associatied with 'the costs of living' for the last twenty years or so.
Because all through the latter half of the 1980's and the 1990's taxes and prices were falling and incomes were generally rising the cost of living was -pensioners excepted- not a big issue.
Since Gordon Brown took over the Treasury taxes have risen by 81% while incomes have gone up by 47% - but most of us have (up to now) been partly shielded from the effects of these mostly stealthy tax increases because of cheap imports from China and low interest rates which have encouraged a 'feel-good' factor based on borrowed money.
That honeymoon has ended. For the first time in nearly 50 years 2006 saw average spending power fall as the increased tax take finally began to bite while the prices of goods and services in the shops are now rising by 4%.
And it's going to get more difficult; interest rates are up and expected to rise sharply as the independant Bank of England act to curb inflation. That means rising mortgage and credit card interest costs for millions of familes.
Rising costs of living and especially rising interest rates always cause a bigger problem to those on lower incomes; making it harder and harder for working people to make ends meet.
The number of households who cannot pay for their heating has increased by 1m in the last three years and 30,000 people are expected to go bankrupt in the first three months of 2007 alone, for instance.
For a while now we Conservatives have been warning that the bow-wave of increased Government tax-and- waste would eventually risk swamping the boat; that danger is now coming perilously close.
Pensioners have been complaining since 1998 that their incomes have been falling in real terms; whilst spiralling council tax and utility bills have been causing real pain and hardship.
Now it seems, the rest of us face the same problem.