Income and outgoings to cause consumers a problem

The governor of the Bank of England, Mervyn King, has recently made a worrying speech over the effects of low income and increasing outgoings, stating that consumers need to brace themselves for a very challenging time over the coming months in terms of their finances.

Consumers are already struggling to cope with their financial situations, with the cost of energy, petrol, and food rocketing out of control. Inflation levels have now soared to way over the government target of 2%, and Mr King warned that whilst costs are set to keep increasing pay is set to rise at below the level of inflation, which will cause further difficulties for consumers.

In his speech King also indicated that the Bank of England would take whatever steps were deemed necessary to bring inflation levels back under control, which strongly suggested that the central bank will think twice about cutting interest rate again.

Alistair Darling, the chancellor, also made a speech that echoed the sentiments of Mr King, stating that larger pay rises were a thing of the past and that consumers needed to brace themselves for rising costs for some time to come.