London Stock Exchange-listed investment trust company Alliance Trust has revealed in its Research Centre report a number of what it calls "headline" factors that British families need to be aware of, especially if they are considering taking on extra debts such as a personal loan in the near future.



The report - which has been going for ten years with the latest quarter two analysis released today - reveals that real earnings growth has now reached its lowest level at any time in the decade that the report has been running, while spending has increased over the last year. The same can be said for levels of household debt, seen in personal loans and secured loans, as well as credit cards and overdrafts.

"Far from never having it so good, we've seldom had it so bad, with homes squeezed by lower earnings growth, higher mortgage repayments and chronic council taxes, to name just a handful of issues", said Shona Dobbie, head of Alliance Trust Research Centre.

"But British families continue to borrow big and spend bigger which confirms this reality just isn't hitting home. It's only really thanks to recent economic growth and lower utility prices that we've seen even a mild improvement in the predicament facing households".

The financial reality index shows that household pressures, such as mortgage payments or secured loans and council tax bills, are leading to households "being squeezed". The household budget index section of the report witnessed a slight rise, suggesting things are marginally better than at the same time last year, but Alliance Trust points out that the index score is still the third lowest on record and is approximately three times lower than in 1998.

According to the net wealth section of the report, however, this factor rebounded into positive territory for the first time since the first quarter of 2006, with consumer debt being counteracted by increasing house prices and rising equities.

Despite the increase in net wealth, the financial reality index has climbed but a few index points and still lies "below the critical territory" of 100 index points. Having been in what is known as negative territory for three years, its current position on 82.0 reflects a near five-point climb, but household budgets continue to "weigh heavily on the index", according to Alliance Trust.

Alliance Trust was established in 1888 and has its headquarters in Dundee as well as offices in Edinburgh, London and Hong Kong, according to the firm's website. At the end of January, it was managing a total of 2.8 billion pounds of assets.

Last month, Alliance & Leicester suggested that borrowers should consider low-rate loans when making big purchases, rather than relying on credit cards or forecourt finance for such requirements. It said that although many borrowers have "good intentions", they could be losing out by not shopping around for the cheapest personal loan.