Why 2017 is going to be a difficult financial year.
The price of the things we buy in the UK is going up faster than how much we are paid for the first time since 2013. There are, however, some things you can do about it.
What is going on?
Are you feeling like your bank balance doesn’t stretch as far anymore, despite pay rises? It looks like we are all in for a tough year financially in 2017, according to the Bank of England. In the Bank’s latest inflation report, it has been forecasted that wages will increase by 2% on average across the UK. However, the average price of the things we buy is expected to increase by 2.8% over the same period. Even if you weren’t top of your maths class at school, you will recognise that this means that our wages will not go as far as they used to.
This compares to the last time the inflation report was published, in February, wages were expected to increase by 3% and the price of products by 2.7%. So things have got worse.
Why is this happening?
It’s a pretty simple one: Brexit!
After the Brexit vote, the value of the pound reduced in comparison to other currencies. This means that we get less euros or dollars per pound. So, if shops buy things from abroad, such as food, they have to pay more. They then pass this on to us, so we, in turn, have to pay more too.
If shops try to be nice to their customers and don’t pass this cost increase onto us, they make less money. This means they then have less money to pay their staff, resulting in smaller pay rises.
So what does this mean?
Well, it’s not looking good for us, is it? This means, if we want to continue to live in the way we were last year, without borrowing more money, we are going to have to be more savvy in the way we shop.
Is there any good news?
Yes, it’s not all doom and gloom. There are three bits of good news:
1) The Bank expects that pay rises after this year will be better than expected. As an example, they think that wages will rise by 3.5% in 2019. However, that is not especially helpful right now and it can always change.
2) We have an election coming up. This means you have the chance to vote for the political party that has the best policies to improve how much money you earn.
3) Technology is coming to your rescue. Platforms like Bean are here to help you maximise every penny that you earn 😉 By simply keeping on top of your energy supplier you can save between £200 and £600 per year. Bean will do this without you needing to lift a finger.