Good thing this isn't happening in the U.S. too


They'd tell us if it was, wouldn't they?

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UK Households Face Biggest Income Fall Since 1970s as Inflation Bites

By Emma Rowley
The Telegraph, London
Monday, March 21, 2011

Britons are suffering their biggest drop in living standards for 30 years, according to a new report by the Institute for Fiscal Studies (IFS).

The average household's "real" income -- what is coming in after inflation is taken into account -- will have fallen by 1.6 percent over the three years to the end of 2011, the influential think-tank said ahead of Wednesday's budget.

In contrast, over the previous half a century, real incomes rose an average 1.6 percent a year, or 5 percent every three-year period.

The study flags up the fragility of the UK's economy as it struggles out of the deepest recession since the 1930s.

... Dispatch continues below ...


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The current decline marks the first drop in the average household's income over any three year period since the early 1990s, and represents the most dramatic fall seen since the start of the 1980s, the report said.

The squeeze signals a loss for the average household of L360 a year, said the IFS, a hit totalling L1,080 over the three-year period.

The IFS said the drivers of the fall in living standards were lower employment and people receiving less interest from their savings, as well as tax and benefit changes and stagnating real earnings -- pay after the eroding effects of inflation are taken into account.

The decline means households are likely to be about 6 percent worse off than they would have been if the recession had not stopped incomes from rising normally, the think-tank said.

The IFS warned that the situation is unlikely to improve soon, given the government's L111 billion austerity programme.

James Browne, the report's author, said: "With real earnings growth slow, and more tax increases and benefit cuts to come, household incomes are likely to remain stagnant for some time."

Household incomes will probably still be below their 2008 level in 2013, he predicted, putting incomes on track for the biggest fall over a five-year period since the early 1970s.

A major factor behind the drop in living standards is the failure of people's earnings to keep pace with inflation, stressed the IFS, echoing the recent warning from Mervyn King, the governor of the Bank of England.

Mr King said that the January VAT rise and other inflationary pressures meant that prices would likely outstrip pay again this year, leaving real wages no higher than they were six years ago. Not since the Depression-hit 1920s has a fall of such scale taken place, said the central banker.

The problem is that the sluggish economic recovery and the weak jobs market means workers are in no position to demand pay rises to keep up with over-target inflation, so earnings are effectively being eroded.

Figures out on Tuesday are expected to show that the squeeze continues. Economists predict that the Government's preferred measure of inflation, the consumer prices index (CPI), hit 4.2 percent in February, more than double the 2pc target and up from 4pc the previous month.

January's VAT rise, the climbing oil price and other spikes in commodity prices are pushing up the cost of living in the UK.

The retail prices index (RPI) measure, which includes more housing costs, should also edge up, from 5.1 to 5.2 percent.

However, despite over-target inflation, the Bank of England has been reluctant to raise interest rates from their record 0.5 percent low, amid concerns doing so could slow growth dangerously and would do little to counter global pressures driving up the oil price and, as a result, the UK's inflation rate.

The IFS study found that the poorest households are seeing real incomes fall by 2.1 percent between 2008 and 2011, a drop of L182 per year.

The richest households fared relatively worse -- although they may feel the hit less -- seeing a fall of 3.8 percent over the three years, equivalent to an annual decline of L2,230.

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Prophecy Resource Spins Off Platinum/Palladium Venture:
World-Class PGM Deposit in Yukon

Company Press Release, January 18, 2011

VANCOUVER, British Columbia -- Prophecy Resource Corp. (TSX-V:PCY)and Pacific Coast Nickel Corp. announce that they have agreed that PCNC will acquire Prophecy's Nickel PGM projects by issuing common shares to Prophecy.

PCNC will acquire the Wellgreen PGM Ni-Cu and Lynn Lake nickel projects in the Yukon Territory and Manitoba respectively by issuing up to 550 million common shares of PCNC to Prophecy. PCNC has 55.7 million shares outstanding.

Following the transaction:

-- Prophecy will own approximately 90 percent of PCNC.

-- PCNC will consolidate its share capital on a 10 old for one new basis.

-- Prophecy will change its name to Prophecy Coal Corp. and PCNC will be renamed Prophecy Platinum Corp.

-- Prophecy intends to distribute half of its PCNC shares to shareholders pro-rata in accordance with their holdings.

Based on the closing price of the common shares of PCNC on January 17, $0.195 per share, the gross value of the transaction is $107,250,000.

For the complete announcement, please visit: