According to research by PricewaterhouseCoopers (PwC), contractors earning an average annual salary of £30,000 will face a difficult year in 2010.
Tomorrow’s Pre-Budget Report is expected to reveal a 2.4 per cent decline in earnings for middle earning households, with mortgage debt and short term credit repayments continuing to bite hard on family finances.
The report also suggests that higher earning individuals will see something like a 9 per cent reduction in their spending power, as the nation as a whole prepares for a dramatic reduction in the standard of living.
As well as the re-introduction of the 17.5% VAT rate, Council tax is also expected to rise by around 3 per cent next year.
According to John Hawksworth, the head of macro-economics at PwC, the most striking result of the report is the “sharp projected squeeze on discretionary spending for a highearner, hit both by higher taxes and a potential marked rise in mortgage interest payments in 2011-12, as well as by higher petrol prices.”
The Conservatives are already labelling the economic situation as Gordon Brown’s “legacy to middle Britain”. Conservative Treasury spokesman Philip Hammond said “His (Brown’s) debt crisis has saddled hard-working families with a huge bill that they and their children will be paying for years to come.”
As well as IT contractor accountants and those that work in the media, middle earners often work in healthcare sectors, as well as nuclear, oil and gas.
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