No money, money, money

Worst spending squeeze since 1970s

MILLIONS of households are enduring the worst spending squeeze since the 1970s. Workers are suffering a double whammy of soaring inflation and weak wage growth. It led to a 1.4% drop in households’ disposable incomes in the first three months of 2017, said the Office for National Statistics (ONS). That followed declines over the previous six months. It marked the first time since 1976 – when Labour leader Jim Callaghan was Prime Minister and ABBA had a number one with Money, Money, Money – that disposable incomes have fallen for three quarters in a row. The ONS said Brits are also saving less of their incomes than at any time since 1963 as they battle to make ends meet. The savings ratio, as it is known, nearly halved to 1.7% in the first three months of 2017. Economist Samuel Tombs said: “Little scope remains for households to reduce their saving rate further.” TUC General Secretary Frances O’grady said: “People raiding their piggy banks is bad news for working people and the economy. “With household debt now at crisis levels, we urgently need to create better-paid jobs.” Separate ONS figures confirmed a previous estimate that the economy grew by just 0.2% in the first quarter. It marked a rapid slowdown from the 0.7% rise in the final three months of 2016. The growth in household spending fell sharply to 0.4% in the first quarter of this year. Experts reckon the weakness of the economy means the Bank of England is unlikely to raise interest rates. But economist Alan Clarke, of Scotiabank, said a rise in the bank’s base rate in August was “still on a knife edge”.

CHART TOPPERS ABBA hit No 1 in 1976