Abacus Daily Debt News

Older people have become the "innocent victims" of the government’s efforts to tackle the credit crunch, it has been argued.

It comes after a report from the Institute of Fiscal Studies (IFS) argued that the elderly face higher rates of inflation than other groups due to energy and food costs.

Commenting on the publication, finance expert Dr Ros Altmann - a governor of the London School of Economics - said that pensioners have been "suffering" as a result of the government’s policies and base rate cuts from the Bank of England.

"Inflation is a real problem for older people … their income has suddenly been slashed," she remarked, referring to the reductions in interest payments that they can earn from savings.

Consquently, older people are "unable to afford what they need to buy every day", Dr Altmann explained.

The IFS report noted that younger people have benefited from base rate cuts in the form of lower mortgage repayments, but pensioners have continued to be hit by high food and fuel inflation.

By Jamie Price

The majority of UK consumers are not expecting the recession to be over for another year, according to a new survey.

Research carried out by Which? has shown that four in five of those questioned feel that it will take a minimum of 12 months for an upturn to be seen.

And 23 per cent believe that it will take more than two years before the economy begins to recover, the study revealed.

"Consumers aren’t under any illusions - they know the financial crisis will take time to sort out," personal finance campaigns manager for the body Doug Taylor.

Many UK adults are also worried about the future implications of the level of public money that has been pumped into the economy by the government, the report noted, as 81 per cent stated they are concerned about tax rises being introduced as a result of this.

Meanwhile, the Priory Group has revealed that its experts have seen a rise in cases of "recession depression" over the past few months.

By Jamie Price

The elderly and low-income households face higher levels of inflation than younger and well-off people, a new report has revealed.

Figures from the Institute of Fiscal Studies (IFS) have shown that despite the official Office for National Statistics retail prices index inflation figure standing at 0.1 per cent, average UK households face a level of 2.1 per cent.

And older people are more affected than others, the IFS noted, as they spend more of their money on food and fuel and less on items such as mortgages.

The elderly have not benefited from interest rate cuts as much as younger consumers with home loans, the research stated.

Commenting on the data, Liberal Democrat shadow chancellor Vince Cable said that it demonstrates how vulnerable groups are being hit the hardest by events in the economy.

People with bigger incomes are beginning to benefit from "very large falls in mortgage repayments and petrol costs", he said, adding: "But for the elderly who spend the majority of their money on heating and food, inflation remains very high."

By Jamie Price

People have been advised to book their holidays using a credit card if possible, as it can help to protect against any events that may happen as a result of the turbulence in the economy.

Steve Barnes, corporate marketing manager at the Association of British Travel Agents, noted that despite the recession, it is in the "British psyche" to go on holiday.

"In difficult times you might downgrade your holiday, but I really don’t think there will be that many that would cancel their holiday," he remarked.

But he warned consumers to take precautions while doing so, in case they are made redundant or a company goes bankrupt.

Credit cards can offer "double protection" as customers can claim back amounts that are over £100 if needed, Mr Barnes stated.

Meanwhile, a survey by Lincoln Financial Group has discovered that 26 per cent of Brits think they will only be able to afford one holiday per year during their retirement.

By Jamie Price

Customers of Skipton Building Society could be set to benefit from lower interest payments, it has been announced.

The lender has pledged to pass on any Bank of England base rate cut made following this week’s meeting of the monetary policy committee (MPC).

Skipton chief executive David Cutter revealed that the firm has promised that its standard variable rate will "never" be over three per cent above the base rate.

He vowed to honour this, even though the figure now stands at its lowest level in the history of the Bank of England.

If a cut is unveiled by the MPC on Thursday, around 15,000 borrowers with Skipton loans or mortgages "will have a bit more money to spend as their monthly payments reduce", Mr Cutter remarked.

However, the Building Societies Association has argued against a further base rate reduction, claiming that it could be damaging to both borrowers and savers.

By Jamie Price

An additional interest rate cut from the Bank of England this week would be "bad news", it has been warned by an industry body.

The Building Societies Association (BSA) has claimed that such a move would have a negative effect on those with mortgages and savings.

Director general Adrian Coles urged the Bank’s monetary policy committee not to reduce the base rate when it conducts its monthly meeting on Thursday.

This is because it would discourage people from saving, which in turn will restrict the ability of lenders to supply loans and mortgages, he explained.

"If the Bank feels further action is now necessary, quantitative easing would be preferable," Mr Coles remarked.

He noted that some pensioners who rely on savings may face "severe difficulties" if interest rates are slashed further.

The base rate currently stands at one per cent following February’s decision to cut it by 0.5 per cent.

By Jamie Price

House values dropped by 0.8 per cent in the first month of 2009, new figures have shown.

Data from the Land Registry revealed the fall, which took the average house price to £156,753 in January - £28,000 lower than a year previously.

Wales saw the most significant decline, with values dropping by 8.8 per cent, which was attributed to the "exceptionally small" amount of sales seen in the country during the month.

In London, year-on-year prices declined by 14.1 per cent, taking the average down to £306,183.

The Land Registry noted that January was the 17th consecutive month in which property prices fell in this manner.

Meanwhile, chief economist for Nationwide Fionnuala Earley has claimed that cheaper house prices and a lower base rate are helping to boost interest from first-time buyers.

"Falling prices and interest rates are raising curiosity now, which could flow through quickly once confidence returns," she commented.

By Jamie Price