Household disposable wealth 'down'

UK households have less money to spend now than they did 12 months ago according to new research.

Data provider KDB told the Dow Jones news agency that the last six months had seen a decrease in disposable wealth of two per cent, bringing average annual spending funds down to £38,929.

Disposable wealth, comprised of cash savings, non-pension stocks and shares and releasable equity invested property, has dropped under £40,000 for the second time in the year.

According to the analyst the decrease in savings rates and an increase in mortgage loans are responsible for this fall.

Despite base rate increases made by the Bank of England, few accounts have realised higher rates as well.

The KDB report said that given the disparity between debt and disposable wealth, "a relatively small adjustment in economic growth, unemployment, or interest rates could very well produce catastrophic consequences".

At the same time, research by Unbiased.co.uk has shown a trend within the UK for short term planning and spending rather than saving.