Umbrella company contractors may be about to witness the biggest drop in household incomes for 30 years, according to the Institute for Fiscal Studies.
A recent study from the think tank found that median take-home incomes increased during the credit crisis but it was entirely possible that they decreased by 3% in the last financial year. If that were the case, income levels would be back where they were in 2005.
Wenchao Jin, a research economist at the IFS, pointed out that average living standards rose during the economic crisis, largely due to benefit and tax credit increases. But this growth cannot be sustained and we now face a bleak outlook for incomes as the long term effects of the recession have just delayed, rather than avoided, a drop in living standards.
This will not come as good news to the 35% of adults in the UK who are neglecting their personal finances. The Priorities of Life Index from Scottish Widows has revealed that a total of 17 million British adults avoid thinking about their finances.
Just over 20% of these said they had too much debt to be able to feel financially secure and 32% claimed they were not paid enough to be able to put money aside. An additional 25% of people said they push thoughts of their personal finances to the back of their mind on a day to day basis.
Iain McGowan, a savings expert at Scottish widows, said we are struggling to prioritise the things that really matter to achieve financial stability and as a result our savings and financial security are suffering. Everyone knows it’s important to save and take the time to sort out financial worries but more than a third of us do not take the time to prioritise our financial affairs, he concluded.
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