Households see biggest income drop for 30 years

UK households saw real incomes fall by 2.7 per cent in the year ending in March, resulting in the biggest drop in disposable income for more than 30 years, according to the Office for National Statistics.

The decrease has been blamed on a combination of factors including higher taxes and rising domestic bills. The figure was adjusted for inflation, which currently stands at a two-and-a-half year high of 4.5 per cent.

Bank of England governor Mervyn King said that an "uncomfortable period" was inevitable as the country adjusted to "the consequences of the financial crisis and the macroeconomic rebalancing that is necessary to get through that process".

Household spending is declining at its fastest rate since 2009 and the news is another blow for the British high street, which has experienced a turbulent few weeks in which Habitat, Jane Norman and Moben Kitchens have all announced they are going into administration.

Read a full report at BBC News. ·