Gordon Brown is facing an economic downturn next year as he struggles to recover from the humiliation of being forced to call off an autumn general election.
Amid signs that the “feelgood factor” is on the wane, a study out today finds the squeeze on people’s spending money is at its worst level in at least 10 years, thanks to higher tax bills and the rising cost of essentials such as food, fuel and mortgages.
And while consumer activity has been relatively robust over the summer, surveys show that confidence in the economy has been shaken by the fallout from the bank lending crisis which led to the run on Northern Rock, the troubled mortgage lender. The darker outlook was one of the reasons why ministers close to Mr Brown were keen to fight an election now.
In its study today the utility website uSwitch.com said that a 42 per cent rise in the cost of essential household goods meant that disposable income now stood at its lowest level as a proportion of overall income since 1997. According to the Office for National Statistics, income levels have risen by just 1.1 per cent in real terms over the past year.