The average family will be £910 worse off this year as they face the biggest peace-time squeeze on their finances since 1921, according to a report.

Rising household bills mean spending power will be significantly less than two years ago, the Centre for Economic and Business Research said.

The consultancy estimates that disposable incomes will fall 2% in 2011, following a 0.8% drop in 2010.

Only the two world wars had bigger impacts on spending, the CEBR said.

The organisation forecasts that inflation will average 3.9% in 2011 – its highest since 1992 – as January’s hike in VAT to 20% from 17.5% and the rising cost of oil and other commodities continue to drive up prices.

Pay packets, on the other hand, will rise just 1.9% as unemployment remains high and the full extent of public sector cuts kick in.

http://www.bbc.co.uk/news/business-13029870

Tax and benefit changes affecting millions of people have come into force amid a political row over their impact.

Labour are arguing that a child benefit freeze, tax credit changes and the way benefits are linked to inflation will leave many families worse off.

The Treasury said there would be “some losers” but the poorest 80% of households would, on average, be better off with some taken out of income tax.

The changes have come into effect as the new tax year starts.

The parties are at odds over who will lose out the most – with the government denying Labour claims that the changes are “regressive”, hitting the poorest hardest.

http://www.bbc.co.uk/news/uk-politics-12981021

Key Points from the BBC:

1. Chancellor George Osborne has delivered the Budget in the House of Commons
2. Fuel duty to be cut by 1p and expected 4p rise cancelled – all paid for by a £2bn tax on oil companies
3. Further £600 increase in personal tax allowance from April 2012
4. Financial help for 10,000 first-time buyers to get on property ladder
5. Tobacco duty rates up by 2% above inflation from 28 March, and alcohol duty rises – 4p extra on a pint, 15p on a bottle of wine and 54p on a bottle of spirits
6. Forecast for how much UK economy will grow in 2011 downgraded

For live update on the Budget: http://www.bbc.co.uk/news/uk-politics-12759543

Senior Liberal Democrats want the government to give away billions of pounds of its shares in Royal Bank of Scotland and Lloyds Banking Group to the general public.

The radical idea would see most of its stake in the banks shared between 46 million adults on the electoral roll.

He said: “There is a danger that when the banks return to the private sector, it is business as usual. There is a general feeling in this country that we need to get something positive in return for the bail-out.

Read More: http://www.bbc.co.uk/news/business-12661005

Reuters:

Families are facing a “cost of living” crisis which will persist for years to come, Labour leader Ed Miliband said on Monday.

Miliband said the expectation that the next generation would always do better than the last was now under threat at a time of rising inflation and growing wage inequality.

Looking at potential remedies, Miliband said that the banking system should be reformed to support business and a range of ownership structures should be considered when the state sells its stakes in high street banks.

The Labour leader accused the coalition government of making things worse for families with children by decisions such as pushing up VAT sales tax and changes to tax credits.

“The crunch will be felt first and worst by low and middle income families, particularly those with children,” Miliband said.

http://uk.reuters.com/article/2011/02/28/uk-britain-labour-idUKTRE71R3NK20110228

TechWatch:

You can’t put a price on many things. The steadfast loyalty of a friend, a Van Gogh masterpiece, a pot noodle…

No, wait. It’s not that you can’t put a price on a pot noodle, it’s that you shouldn’t. Even giving them away free is too expensive.

Snack-food digressions aside, you can apparently put a price on the damage cyber-crime does to the ailing British economy. And that figure is a staggering £27 billion every year.

So consultant firm Detica claims, in research conducted in conjunction with the government’s Office of Cyber-security. £27 billion is lost due to Intellectual Property theft and industrial espionage, the report states.

Cyber-crime hits the government itself for around £2.2 billion, and the citizens of the UK for £3.1 billion, but businesses cop for most of the damage – £21 billion. IP theft represents some £9 billion of that, and espionage £7.6 billion.

The hardest hit industries are the pharmaceutical and biotech sectors, electronics, chemicals and IT.

http://www.techwatch.co.uk/2011/02/17/cyber-crime-costs-uk-economy-27-billion-per-year/

eGov Monitor:

Youth unemployment in Britain is a serious concern as it reached a record high of 965,000 in the last quarter of 2010, according to figures released by the Office for National Statistics (ONS) earlier today.

Number of young people out of work rose by 66,000 in the three months to the end of December 2010, taking the rate up to 20.5%.  The overall unemployment numbers rose by 44,000 to 2.49 Million during the same period.

“This mini-recession in the labour market as a whole is turning into a major crisis for young people,” said Ian Brinkley Director at the Work Foundation.

“Young people’s employment will not recover significantly until employers start hiring them again in significant numbers and that depends on the overall state of the economy. But in the meantime, the government needs to look again at levels of support for young people through temporary employment programmes and encouraging more apprenticeships and paid intern placements.

http://www.egovmonitor.com/node/40775

BBC news:

The UK Consumer Prices Index (CPI) annual inflation rate rose to 4% in January, up from 3.7% in December, as the effects of the VAT rise were felt.

Higher oil prices also meant inflation remained well above the 2% target.

Retail Prices Index (RPI) inflation – which includes mortgage interest payments – rose to 5.1% from 4.8%.

The CPI figure is the highest since November 2008, and will put pressure on the Bank of England to lift interest rates to curb accelerating inflation.

The CPI measure has now been one percentage point or more above target for 14 months.

Source: http://www.bbc.co.uk/news/business-12462901

The Bank of England has once again voted to hold the base rate at 0.5%, meaning we have now faced almost two years in a record-low interest rate environment.

With inflation expected to soar above 4% when next week’s official figures are announced, there has been growing support for a hike sooner rather than later.

Indeed, the minutes from last month’s rate-setting meeting revealed that two of the nine members had voted for a hike.

Source: MSN Money

From the BBC:

The government says it will increase the levy on bank profits to £2.5bn this year – raising an extra £800m.

The change would usually be set out in next month’s Budget.

But BBC business editor Robert Peston said the Chancellor had “concluded that the banks are in better shape than he thought less than two months ago, when he announced that a smaller levy would apply in the current year”.

Source: http://www.bbc.co.uk/news/business-12389416