Pocket money crunch strikes UK children

UK children are seeing a crunch on their liquid assets as pocket money is falling as parents tighten purse strings.

Average weekly pocket money in 2008 fell £1.88 to £6.13 a week.

The 23 per cent fall comes despite inflation rising 4.4 per cent – making UK children are £3.30 worse off in real terms.

Had pocket money risen in line with inflation, today's pocket money would stand at £9.43.

However, their fall in income is in part due to parents taking greater control of capital expenditure and buying larger one-off items and leaving pocket money for day-to-day petty expenses.

Tony Wilcox, head of savings at Halifax, said: "Our latest findings really show a mixed bag - pocket money doesn't appear to have increased this year but children don't seem to fund any major expenses from their allowance."

The research by Halifax also shows two nations of children with London and Scottish minors receiving , £8.47 and £8.20 – providing annual incomes of £440.44 and £426.40 – compared with their the East Midlands and the south-west counterparts receiving £4.46 and £4.58.

As Alistair Darling urges Brits not to push for above inflation pay deals to keep a lid on rising costs, 17 per cent of children report no pocket money increase in the last year.

Meanwhile, as economy downturn increases the need for saving, some 71 per cent see their pocket money only as a means of exchange and not a store of wealth, as just 29 per cent admit saving.

Others prefer to wait for Christmas and birthday windfalls to receive or fund big ticket purchases.

Daniel Barnes