Squeeze goes on as costs still outstrip wages
NEARLY 800,000 Scottish households are worried about their finances despite the economic recovery and record numbers of people in work. New f i gures r eveal t he devastating impact the long squeeze on household budgets has had on Scots.
According to research, more than 200,000 families have already had to cut back on essentials to pay household bills.
Energy bills are the biggest concern for Scots consumers, followed by fuel and food.
The research by consumer group Which? found 29 per cent of families had to reduce spending to make ends meet, while 65,000 have used a payday loan to pay bills in the last month alone.
It follows five straight years of inflation outpacing wages, leaving thousands of households in severe financial difficulty.
Scots are also feeling the pinch more than their counterparts across the Border.
According to the report, Scots are being forced to around 2 per cent more than the rest of the UK on basics such as groceries and toiletries.
Glasgow was identified as the area experiencing the worst financial troubles compared with anywhere else in Scotland. The four most financially distressed constituencies were all in the city, with Glasgow East the worst.
It also found the amount of money being spent by families on household utilities such as energy and water has more than doubled in the past decade.
The average household spent 3 per cent of their total spend on utilities in 2003 but this has now increased to 7 per cent.
Keith Dryburgh, policy manager of Citizens Advice Scotland, said: ‘These figures are not surprising and are very similar to the evidence we see in CABs across Scotland.
‘We keep hearing it said that the economy is improving but for low income families this is not the reality in their day-to- day lives.’
The report also found 5 per cent of Scottish consumers had taken out a new credit or storecard in the past month, while 3 per cent – around 65,300 households – had taken out a payday loan.
About four in ten Scottish consumers say they were concerned about the level of their household debt and more than half are worried about their level of savings.
Gordon MacRae, head of public affairs for Scotland at Which?, said: ‘ The cost of essentials remains high and there remain levels of worry about household debt and savings. It is also clear that businesses, particularly in banking and energy, have more to do to win back consumers’ trust.’
The latest survey follows warnings last week that the economic recovery is under threat from soaring household debt.
The economy is expected to grow by more than 2.5 per cent this year and the jobs market will continue i ts ‘ unprecedented’ recovery.
But according to economic thinktank the Fraser of Allander Institute, Scotland’s recovery from recession is the weakest for 80 years and faces major threats.
Brian Ashcroft, emeritus professor of economics at Strathclyde University, said: ‘It is the boom in the London housing market that causes us most concern. We believe the Bank of England must avoid raising interest rates on that account.’