Review of the year - December 2012

George OsborneLewis Whyld/PA Wire

December hit us with a slap in the face: in the form of the Autumn Statement. There was bad news for just-about everyone, with more austerity, higher taxes and a real-terms benefits cut. As the month wore on, we were hit with more rising prices and blows to pensions.

We powered on through, to spend our way out of misery. However, there are some signs that this may not prove to be such a good plan.

Autumn Statement debatePA Wire

Autumn Statement

George Osborne had a raft of bad news to tell us at the beginning of the month. He announced that austerity would continue for longer than expected, and that income tax thresholds, public sector pay and benefits would not be keeping pace with inflation. There was also a dramatic cut to the maximum that can be put in a pension tax-efficiently. The only striking piece of good news was another step towards an income tax threshold of £10,000.

Rising prices

O2 logoDPA DEUTSCHE PRESS-AGENTUR/DPA/Press Association Images

The bad news continued as the month wore on, as hard-pressed families faced yet more rising prices. Big names joining the price-hiking fray included energy group E.ON, which became the last of the big-six energy suppliers to announce it will increase tariffs on January 18 by 8.7%. O2 also pushed prices up 3.2%. Even those supposedly on 'fixed' tariffs faced the price hike - as the small print allowed for it in exceptional circumstances.

A study also revealed that the big supermarkets had been raising the prices of a huge range of their 'own brand' groceries: blaming the rising costs of production and transportation for the move.

Pensioners also had their share of blows

The government moved the goalposts, so that more lower earners no longer qualified for pensions auto-enrolment. It means that between the time of the scheme being announced, and the point at which people started to benefit, a million would be excluded from the scheme because they did not earn enough.

This came hot on the heels of news that 959,000 people who have reached the retirement age of 65 are still at work. And the number keeps growing: this is 100,000 more than this time last year. And if we don't start to save properly, this figure is only going to increase.

RBS branchAP Photo/Lefteris Pitarakis

Banking changes

However, the news from the banks was more positive. New rules on packaged current accounts meant that providers had to send statements to customers each year specifying if the insurance was as good a deal as they expected.

Meanwhile RBS, NatWest and HSBC all finally backed down on an odd rule that meant that if you walked away from an ATM without taking your cash, it wouldn't be re-credited to you unless you asked for it. They all pledged to change their rules and compensate those who had lost out

Starbucks caves

There was also positive news from Starbucks, which finally caved under popular pressure and announced that it expects to pay "somewhere in the range of £10 million" in UK corporation tax for each of the next two years.

Boxing Day salesStefan Rousseau/PA Wire

Christmas spending

This was a small consolation for the bad news, but not enough to fill us with the requisite festive cheer, so it turns out that this year we decided to spend our way to happiness. Boxing Day sales records were smashed. In London's West End shopping areas, footfall was up 31.3% on Boxing Day last year. The UK average footfall was up by 21.6%.

The worrying news is that there's every sign we couldn't afford this spending spree. After all, nearly half of Britons had already admitted that they paid for their Christmas on credit this year.

Lottery deadline expires

But for someone, this was the month that their life should have changed dramatically. The trouble is that poor organisation means that they'll never know about it.

A mystery lottery player lost out on a £64 million fortune after the deadline for them to claim the life-changing prize expired. It was the biggest unclaimed lottery win in history.
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