If British chancellor Alistair Darling now occasionally tires of being reminded of his party's erstwhile promise of  "no more boom and bust", he won't thank British accountancy firm Grant Thornton  for sending journalists a bike puncture repair kit.

Billed as "Darling's economic repair kit -- fixes deflation in all business cycles", the marketing gimmick highlights the serious challenge facing Darling as he prepares to deliver his annual budget to parliament on April 22.

Researchers at the non-partisan Institute for Fiscal Studies  say Britain needs to find another 40 billion pounds in savings or higher taxes, equivalent to nearly 3 percent of GDP or £1,200 per family, if it is to balance its budget by the 2015/16 tax year, as Darling promised to do in his October pre-budget report.

IFS Deputy Director Carl Emmerson, who co-wrote the report, told Reuters MacroScope that Darling would have a tough time politically making convincing promises about future tax rises or cuts to government spending, especially as there's a national election due within little over a year.

But doing so could make it easier for Britain to raise the necessary billions from international debt markets, after a scare last month when the Debt Management Office failed to sell all of a 2049 gilt to investors.

It would also allow more scope to announce a slightly bigger fiscal stimulus package at the budget, said Emmerson -- who rejects the idea that the government should start reining back spending or raising taxes in the recession.

(Reuters photo: Pascal Rossignol)

Financial website Unbiased.co.uk announced this week that as a nation we spent the first 83 days of the year working just to pay the interest on our debts. Personal loan levels increased to 11.4 billion pounds in 2008, up by over 1.6 billion pounds on the previous year and mortgage debt from equity release loans also increased by 6.5 billion pounds. Credit card debt, on the other hand, decreased by just over 4.9 billion pounds.

If you are struggling to pay off your debts, here are some useful online resources to help you out.

You can start by reading our top tips to help you beat debt problems. Budgeting properly is essential and you can use Unbiased.co.uk’s budget calculator to rein in your spending and borrowing and work out how much you will be left with each month to service your debt.

If you feel like you need expert financial advice then Unbiased’s website is the best place to find an independent financial adviser you can trust. You can also talk to the Consumer Credit Counselling Service, a charity which offers free and confidential advice and support to anyone dealing with debt problems.

Moving the balance on your credit card can save you hundreds of pounds a year in interest. You can find and compare the best deals Moneysavingexpert.com’s credit card and loans section. Its guide to improving your credit score will make life easier for you once you get back on your feet and the debt problems section is an invaluable resource for those of you who think your debt crisis is unsolvable.

Switching utility provider can also lead to savings that you can use to pay off debt. Compare gas and electricity suppliers at moneysupermarket.com as well as other providers such as mobile phones, broadband and insurance.

Cutting back on little luxuries like coffee, newspapers and cinema tickets soon adds up. Find out how much you can save each year by using Barclay’s little extras calculator.

-- David Kuo is a director at the financial Web site The Motley Fool. The views expressed are his own. --

What are consumers supposed to make of the latest inflation numbers? Do we have inflation, deflation or a bit of stagflation?

Truth is, it depends on who you are and what you do with your money. The Retail Prices Index or RPI tells us that prices today are exactly the same as they were a year ago. The Office for National Statistics reported that RPI was unchanged at 0%.

But be very careful when bandying around the term “prices”. The RPI includes elements of housing costs. So it is better to talk about the cost of living rather than prices. Prices have risen compared to a year ago, but the total cost of living as measured by RPI has fallen because of the disproportionately large drop in mortgage costs as a result of lower interest rates.

The proof, if proof was needed, that prices have risen from a year ago, can be seen from the Consumer Prices Index (CPI). Instead of 0%, as measured by the RPI, prices as measured by the CPI are 3.2% higher. The CPI does not include housing costs, so it is a better measure for people on fixed-rate mortgage deals, and also for people in rented accommodation.

The upshot is that if you have taken on mortgage debt and chosen to spend rather than save, then you are worse off as a result.

However, it’s worth bearing in mind that both the RPI and CPI are broad measures of inflation. Consequently, the extremely large basket that is used to gauge inflation may not necessarily reflect the true changes in the cost of living that you may experience. Put another way, if we don’t buy exactly the same things that the ONS puts into its basket then we will experience a different rate of inflation.

To measure our personal inflation rates we need to compare our household budgets today with what we spent a year ago. Interestingly, a twice-yearly study by The Motley Fool has shown that personal inflation is consistently higher than the Government’s measure of inflation.

This should set alarm bells ringing for many of us.  If inflation refuses to die in a so-called deflationary economy, then the outlook for the cost of living could worsen when the Government finishes pouring money through quantitative easing or the printing of raw money.

The jury is still out as to whether quantitative easing will work. It is almost anyone's guess. But history tells us that boosting the supply of money can be inflationary. This is because when there is too much money sloshing around an economy, chasing a limited supply of goods,  prices will inevitably rise.

Investors therefore have two clear choices. They can sit on their hand and hope that their nest eggs will not shrink to the size of quails’ eggs through inflation or they can heed the lessons of history and invest in assets that have demonstrated an ability to combat inflation.

Only two asset classes have successfully beaten inflation in the long term. These have been property and shares. Most homeowners already have a large exposure to property. So, it may be prudent to increase their exposure to shares to rebalance their way their wealth is distributed.

Interestingly, the yield on UK shares is currently around 5%. That is almost ten times more than interest earned in a traditional savings account. Of course your capital is exposed to both ups and downs.

Even better yields may be available from individual shares. But it is vital to choose carefully. After all, dividend payouts are at the discretion of the company's directors. That said, companies are often reluctant to cut dividends unless they absolutely have to. And a careful selection of companies whose dividend payouts are strong could be just the panacea for embattled investors.

-- Read David Kuo's blog here or listen to the Motley Fool podcast.

Getting into university is quite often the easy part, while figuring out how to pay for it is the real challenge. And higher education could get even more expensive if university chiefs get their way.

Vice-chancellors from 12 universities said in a report commissioned by Universities UK that an average fee of up to 7,000 pounds a year is necessary to secure long-term funding for teaching. The National Union of Students condemned the proposal, saying that it would deter poorer students from applying and leave graduates with massive debts.

If you are going to start university soon or are already enrolled, or if you are a parent about to send your child to university, there are a number of online tools and resources that will help you to better understand tuition fees and find financial support if you need it.

Moneysavingexpert.com has teamed up with the Department of Education to produce a free parents guide to student finance which shows how student finance works and how you can get your kids into higher education without taking on too much financial strain. The guide has everything you need to know about funding university, from financial support to student bank accounts and tips on getting a part-time job.

You should also have a good look at the site’s Student MoneySaving section which will help you to understand the difference between ‘good’ and ‘bad’ student debt (student loans compared to, say, credit cards) and where to find hidden scholarships and grants. Moneysavingexpert.com also has a comprehensive guide to student loans and grants.

Directgov has up-to-the minute information for all types of student. Their student finance section is an invaluable resource for full-time, part-time, disabled and overseas students looking to find out more about the best way to fund their higher education journey. There is also information for parents and you can even apply for finance online. Directgov’s interactive bursary map , which will take you to any university bursary page in England, is also very useful.

Elsewhere, Studentcashpoint.com is a comprehensive source of information on grants, loans, burseries, scholarships and awards. The site also has useful tips on surviving on a student budget and you can sign up for free automatic funding alerts.

UCAS, the organisation which processes applications to higher education, has an extensive budget calculator which will help students total up their monthly income and outgoings to reveal what they will be left to live on.

If you just want to know more about tuition fees, how they work and where they apply, look at this Q&A by the BBC. Finally, theindependent.co.uk has a student section full of guides to organising your spending and how to find discounts on essential items like laptops.

Losing your job can come as a massive shock, even if it is something you have been worrying about for months. The latest figures show that for the first time in over a decade the number of people out of work has risen above two million.

If you are one of them, you probably want to find a new job as quickly as possible. Here are a number of useful resources to help you.

Redundancy procedure, your rights, unfair dismissal

Directgov

Citizens’s Advice

CAB Advice Guide

The Advisory, Conciliation and Arbitration Service

Debt

Consumer Credit Counselling Service

National Debtline

CAB Advice Guide

Find legal advice

Law Centres Federation

Law Society

Payment protection insurance

Association of British Insurers

Benefits and financial support

Jobcentre Plus

CAB Advice Guide

Directgov

Careers advice and retraining

Directgov Careers Advice

Tax guides

HM Revenue and Customs

Chancellor Alistair Darling has delivered a 20 billion pound fiscal stimulus package to get the nation spending again and mitigate the worst effects of the downturn.

He cut VAT to 15 from 17.5 percent just in time for Christmas shopping – a move he said would put some 12.5 billion pounds in consumers’ pockets over 13 months. Other measures include well-leaked plans to help homeowners, small businesses, parents and pensioners.

But government borrowing will more than double to 78 billion pounds this year and 118 billion next year before starting to come down. Darling says he will bring the public finances back into balance by 2015.

The package now sets in stone the diverging approaches towards the downturn being adopted by the main two parties. Labour is effectively spending its way out of recession, the Conservatives — against the run of most independent economic advice — have opted for caution. Shadow Chancellor George Osborne said the plans amounted to “putting a time bomb,” set to explode in the future, under the nation’s finances.

What do you think? Is this a bold and innovative way to get the economy moving again or a dangerous, debt-fuelled gamble?

Think you’ve got plenty of time to save for retirement, boost your bank balance or achieve the level of wealth you’ve always aspired to? Think again.

While it might be said that life begins at 40, this is far from the case on the financial front: wage growth stalls 30 years before the average retirement age, according to personal finance website Fool.co.uk.

A poll of 3,321 of its panel members found that average earnings accelerate in the 20s and 30s. A typical 16- to 20-year-old sees their wages increase from 15,000 pounds to 17,500 pounds by the time they reach their mid-20s, then to 25,000 pounds between the ages of 26 and 30. The rate of increase accelerates through the early 30s — to 35,000 pounds between the ages of 31 to 35.

But, average earnings then flatted out — and remain at 35,000 pounds until aged 55. If that doesn’t make painful enough reading, it gets worse: income typically falls to 25,000 pounds from the ages of 56 to 70, then drops to 20,000 for those aged 71-plus.

Women’s earnings reach their potential earlier, but with a whimper rather than a bang. Earnings plateau in the mid-30s, compared to the mid-40s for men, and never reach the peak of 45,000 pounds hit by their male counterparts.

This withering in wages coincides with a stage in life that is typically more dynamic — making income stagnation a double blow. It is around this stage that eight out of 10 people own their own homes, of which a third are family dwellings. Six out of 10 support dependents — including both parents and children.

What makes the findings even more worrying is that people in their 20s and 30s have racked up a sixth of Britain’s total consumer debt in recent times, according to Bank of England figures. It is this uncontrollable spending — and “can’t save, won’t save” mentality — and could spell serious trouble.

Just think – at 40, contributions of more than 2,000 pounds per year are necessary to support an average lifestyle at retirement. Wait until the big 5-0 and that figure soars to almost 6,300 pounds.

But just look at what happens the earlier you start: those who start a pension at aged 30 need only stash away 738 pounds per year to achieve a 200,000 pound pension pot (based on a 10 percent investment return). Nine years earlier — when 21 — that figure falls to 306 pounds. Start pension saving at sweet 16, and annual contributions of 189 pounds could spell a 200,000 pound retirement pot; at aged 13 the figure stands at 141 pounds; and at birth just 30 pounds per year would need to be saved.

That’s a cautionary tale, if ever there was one, for today’s 20- and 30-somethings.

These days, “keeping up appearances” has less to do with the pompous Hyacinth Bucket (or should that be “Bouquet”?) of the British sitcom of the same name, more to do with “bling” and extravagant spending by the younger generation.

A survey of 1,619 consumers, commissioned by mobile banking service Monilink, found that 71 percent of 16 to 34-year-olds admitted secretly competing with their friends in the purchase of “luxury” products — cosmetics, gadgets, clothes and the like. Image concerns are the key driver of this “bling-itis”. Over half (56 percent) of those questioned say they believe people are judged on appearances and possessions in modern British society, rather than personality.

That has fuelled a level of spending that is problematic at best, severely damaging at worst. More than 60 percent are still paying off credit card debts from “bling-itis”-driven luxury purchases from 2006 and 2007; over a fifth say they have so much debt from non-essential spending that repayments are a “significant” strain; and around the same proportion admit they find it hard to keep track of spending and make ends meet.

Perhaps even more worryingly, young Britons associate spending with personal happiness, and value short-term luxury over longer-term financial security. Some 55 percent of 16 to 34-year-olds purchase goods simply to make themselves happy and “feel down” if they don’t get the opportunity to buy goods regularly. Meanwhile, 72 percent state that a good lifestyle in the short-term is “considerably” more important than making savings in case of an emergency (27 percent). Top areas of spending to achieve this “good lifestyle” are holidays (27 percent), drinking and going out (21 percent), clothes (19 percent), gadgets (12 percent), home improvement (10 percent), cars (8 percent) and jewellery (3 percent).

If only they’d listen to the Janet Jackson and Luther Vandross hit of 1992: the best things in life are free.

Here is a round-up of Tuesday’s headlines:

DAILY MAIL: Father of Four Taken to Court and Fined…Because he Overfilled his Wheelie-Bin by Just Four Inches

Bus driver Gareth Corkhill collected a conviction and a 210 pound fine after he declined to pay a council on-the-spot fine for leaving the lid of his wheelie bin ajar four inches. Story here.

THE TIMES: Judges Set to Deliver Fresh Blow on Terror

Gordon Brown was facing a new battle over key anti-terrorism laws this week with the High Court set to rule against powers to freeze suspects’ bank accounts, the paper said. Story here.

The Sun: Harry Meets His Hero

Prince Harry, who served in Afghanistan, is pictured smiling and relaxing with wounded soldiers recovering in the Forces rehab centre in Surrey. Story here.

The Independent: Can the Bank’s 50bn Pounds Save the Economy?

The newspaper’s Hamish McRae explains in a typical Independent comment-style front page that the Treasury and Bank of England’s line of credit may not be enough to keep the supply of mortgages flowing. Story here.

Daily Express: Miracle Surgery Lets the Blind See

The paper looks at how British doctors carried out pioneering surgery to restore the eyesight of two blind patients. Story here.

The Guardian: You’re Dragging Us to the Edge, Labour Rebels Warned

Gordon Brown moved to stop a potentially damaging backbench budget rebellion with a contrite address to Labour MPs and a promise to hold a review before the autumn on the impact of the abolition of the 10p tax rate. Story here.

The Financial Times: King Rules Out Return to Risky Mortgages

The paper quoted Bank of England governor Mervyn King insisting that the housing market will not see a return to the profligate mortgage lending practices of the past few years while he announced a massive operation to support liquidity in British banks. Story here.

Daily Mirror: Show Some Heart

Chancellor Alistair Darling was going to tell bank chiefs to go easy on families who fall behind with their mortgages, the paper said. Story here.

A little white lie never hurt anyone, right? Wrong: it could have serious financial implications for your future. A growing number of people are getting into financial difficulty at a younger age and are then telling lies on applications forms to obtain credit, insurance and other products, according to CIFAS, the UK’s fraud prevention service.

The number of application fraud cases filed on the CIFAS database increased from 62,000 in 2004 to 77,000 in 2007, an increase of more than 24 percent. In each of these cases, people told “material falsehoods” on application forms or supplied false or altered documents to support them. The lies most frequently told included trying to conceal a poor credit history or exaggerating the length of time resident at a particular address in the belief that stability increases creditworthiness.

Verification checks often unearth such “little white lies”. But there are also more serious ramifications. At the very least, having your application refused could, in itself, work against your credit score. “Lenders look at the number of searches conducted by consumers as part of the credit assessment process and a number of searches in a short space of time would impact on a consumer’s score,” says Neil Munroe, external affairs director at credit reference agency Equifax. “But more significantly, if a lender felt the information provided could be deemed as fraud and decided to prosecute, this would show on an individual’s credit file and could seriously affect their ability to get credit in the future.”

People who have missed payments on previous credit agreements are advised to explain these to any new potential lender. A “notice of correction” service run by credit reference agencies give the facility to provide an explanation of circumstances that might adversely affect your ability to obtain credit on your credit file. There are other ways, too, to try and improve your rating:

* Make sure you are registered on the Electoral Roll — this is an essential way for lenders to verify an applicant’s identity and prevent ID fraud;

* Be aware of searches on your credit file when shopping around and how it can affect your credit rating;

* Close old credit card accounts — even if they show a zero balance lenders will look at the potential credit available when assessing applications;

* Aim to pay off more than the minimum each month otherwise it could take years to pay off debts and you will incur huge amounts of interest;

* Set up Direct Debit payments for loan repayments to avoid costly late payment charges.

And above all exercise honesty. In this case, it really is the best policy.