Are you feeling the squeeze?

With Budget day looming, increases in mortgage rates and the price of petrol at an all-time high Joshi Herrmann asks our panel about their finances and if Londoners are tightening their belts

Joshi Herrmann

7 March 2012

Rarely in modern times have British householders approached Budget day with so little coming in and so much going out.

Last week the news that two of the country’s biggest lenders are raising their mortgage rates came at the same time as the announcement that the price of petrol had risen to a record 137p.

Yesterday the housing charity Shelter warned that nearly two million Londoners could be driven out of the capital by the cost of housing, after a survey found that 30 per cent of respondents were afraid their living costs, mortgages or rents could prevent them living here.

And speculation that the Government might alter council tax bands to reflect the current value of property, in a bid to move the emphasis of taxation from income to wealth, won’t calm their concerns.

To find out how Londoners are coping with the biggest squeeze on household incomes for a generation, we asked our panel, whose incomes and circumstances range from negligible earnings to hundreds of thousands of pounds.

STUDENT

LUCY BRISBANE, 19

BLACKHEATH

Feeling the squeeze? Comparatively, yes, but being poor is just part of being a student.

Are you cutting back? I rarely buy meat because it seems to be twice the price it was last year — I’ve practically become an economic vegetarian. My flatmates and I shop in Lewisham market so we can afford fruit and veg, and go to Lidl for everything else.

Has your income changed? I’m lucky enough to know people who can offer me odd jobs, so my income is about the same as last year, when I worked in a café. Last week I was dressed as an air hostess for a photoshoot and sold wedding cakes at a fair. A lot of my student friends are working silly hours alongside their studies, mostly for the minimum wage.

YOUNG PROFESSIONAL

TIM ALFORD, 30

E-COMMERCE MERCHANDISER, ISLINGTON

Feeling the squeeze? No. I have noticed the increase cost of living but I haven’t had to fundamentally change my lifestyle.

Are you cutting back anyway? Yes, on football tickets and nights out. I was debating with my flatmate about going to Arsenal v Spurs a couple of weeks ago. Previously I would have jumped at the opportunity but I can’t really justify £71 for a ticket. My rent has just gone up £70 a month and there’s been a £30 increase on gas and electricity, which means less disposable income. I am also going out less, which may just be an effect of getting older, but in the not-too-distant past I would probably have at least one big night a week, and spend £50-£100. Now this has gone down to a few pints and no more than £30.

Has your income changed? My personal income — less than £40,000 a year — hasn’t increased in the past six months, and though I am hopeful for a pay rise in the next six (hint hint boss if you’re reading), I wouldn’t say I’m expecting one. In the current climate I am just happy to be in a job that I enjoy and feels reasonably secure. My industry [retail] has been quite badly impacted by the recession and I think most people are generally accepting that promotions and pay rises are a bit harder to come by than they may have been in the past.

CITY HIGH-FLIER

CHARLOTTE BLACK, 51

CORPORATE AFFAIRS DIRECTOR, LAMBETH

Feeling the squeeze? I’ve just bought a beautiful ceramic sculpture by the young British artist Rachel Kneebone, so it does not feel like I am curbing spending — though I consider it a good investment.

Are you cutting back anyway? My principal economies this winter have been fewer cabs, longer walks and turning down the heating — thanks to the clement weather.

Do you feel we are in a recession? I’ve noticed that several small shops have closing down, invariably to be replaced by coffee shops. I also see signs of hope, and with interest rates so low people are seeking better returns from investing in businesses rather than leaving cash on deposit — this is a confident long-term view for the economy.

LIVING-WAGER

CHARLENE LEGG, 25

VOLUNTEER COORDINATOR, LEYTONSTONE

Feeling the squeeze? Yes, I earn just above the London Living Wage [around £25,500 a year], yet I have less disposable income than ever.

Are you cutting back? My partner and I have cut back on takeaways — we used to have at least one every week but now it’s more like once a month. We go out for dinner less frequently, and buy a lot fewer takeaway coffees.

Do you feel we are in a recession? I live very close to the new Westfield shopping centre at Stratford City and you wouldn’t think there was a recession — it’s always really busy! I think people are consuming more to cheer themselves up. When you have such a small amount of disposable income, saving for a house deposit or a car seems hopeless, so you end up buying some new clothes instead.

SHOP OWNER

DANNY MICHELSON, 68

OWNER OF LA FROMAGERIE, ISLINGTON

Feeling the squeeze? No. My living expenses are quite low and I can, for the moment, absorb these increases.

Are you cutting back anyway? I haven’t actually stopped buying anything in the past six months, although I spent a bit less over Christmas than I did last year — about £350, down from about £500.

Do you feel we are in a recession? No, but I don’t feel the economy is growing either. I see and read about businesses going under, particularly in the retail sector, which is what I’m in but I was amazed at how busy the West End was in the New Year sales and good restaurants around town are as full as ever. My own business is also doing reasonably well.

BANKER

David Blanc, 41

WEALTH MANAGER, SOUTHWARK

Feeling the squeeze? No, but I had to raise the mortgage so my debts are going up but it’s manageable. I’m working harder and harder to make sure my family has enough cash.

Are you cutting back anyway? We used to go out every weekend to nice restaurants but we are much more careful on our evenings out now. We have also not taken a long-haul holiday for a while and are not planning to have one in the next year.

Biggest monthly expense? Rent, which is £2,000 a month, and the children’s education. Both of my girls are at a French private school, which is £1,500 per month altogether.

Do you feel we are in a recession? I feel like we are in a double-dip scenario as I have seen more shops closing down — La Senza, Thorntons — and travel companies going under. People are going for the cheap option, as demonstrated by McDonald’s opening up hundreds more restaurants.

STAY-AT-HOME MUM

JULIET ELKAN, 45

GREENWICH

Feeling the squeeze? No, it’s manageable. We need to be careful but overall I’m optimistic for 2012.

Are you cutting back anyway? Yes, I would like to be able to feed the four of us on £75 a week, but it’s a struggle — and if you have friends or family round it seems impossible. I’ve been trying to cut down on meat. We have also been economising on the car. Last August we went to Devon, and it was cheaper (and quicker) to go by train with discounted advance tickets, and hire a car there.

Are you putting money aside? We are overpaying our mortgage by £50 a month, to take advantage of the very low interest rates. I pay a very inadequate £35 per month into what was a stakeholder pension (I think it has a new name now), and my husband pays into a company scheme. We also save our child benefit payments in a separate fund, although we don’t have any specific plan for the money.

LAWYER

YVONNE BROWN, 50

SOLICITOR, BARNET

Feeling the squeeze? No, but our household income has fallen in the past six months.

Are you cutting back anyway? Yes, we have worked hard and enjoy travelling to the Caribbean but recently the increase in air taxes has caused us to review our travel plans.

Are you putting money aside? Yes, I have always been a regular saver. I have tried to prepare for retirement by contributing to a private pension and by having other savings. The recession has caused pension values to fall and I sometimes wonder whether it would have been better to put the money in a high street building society account.