United Kingdom: bills keep piling up with prices that are rising almost on a monthly basis

For many people, the way rates of inflation are calculated is an absolute mystery that bears no relationship with the their cost of living. The cost of utilities and the cost of the shopping basket (itens that you need to buy or buy because you could not possible be without) is rising and often by 100%. 

No sooner you are trying to digest the cost of recent increases you get another letter informing you about additional costs to be introduced next month. In my mind, this amounts to devaluation. You are getting less for your monies. Your pounds are worth less and less and less and there is end in sight.

Another issue that should have more and more people worried is the fact that house prices are dropping and for those who have mortgages and loans used to acquire the property that live this means the certainty of having to deal with negative equity - when the value of the assets is less than the financial commitments you signed for in order to acquire the said assets.

You could have a mortgage for 1,000,000 Pound when in fact your property value is now 700,000 Pound. Even if you sell your property you will still owe the lender the amount of 300,000 Pound. No property left. Just debts. Those who have been faced with negative equity can tell you that it is not a nice experience.

For you is a very bad experience. For the financial system it could be even more catastrophic. Northern Rock was bankrupted. Many of the big banks had to be rescued with taxpayers monies. When Gordon Brown made the decision to rescue the banks, he did it because the alternative was financial paralysis.

If peoples incomes go down because of additional taxation, rising cost of borrowing and inflation, it is to be expected that disposable income will go down dramatically thus affecting consumption. Less consumption, more unemployment and more support needed to keep the unemployed and those do not earn enough alive.

We have not seen the nex budget being prepared by the Chancellor of the Exchequer John Healey. The Prime Minister says that increases in defense expenditure will not happen at the expense of welfare and of vital services. The cost of public debt is rising and the country is left with unsavoury alternatives - more borrowing, tax increases and budget cuts.