According to recent reports many people are set to experience pay freezes next year, which means that more and more people will struggle to keep on top of their financial commitments, and many may fall into increasing debt because of the cost of living rising whilst pay is being frozen.

Last year also saw many workers having no pay increases, as companies tightened their belts and either reduced pay increases or froze them altogether. Many officials believe that next year is going to be equally as challenging, and many people will have to continue struggling along with no increase in their pay.

The concern that many people have is that whilst pay is being frozen or rising only marginally the cost of living is continuing to soar, with prices on things such as food and petrol rocketing. On top of this, January will see the VAT increase of 2.5 percent kick in, which means that consumers will be paying more for many of their purchases even though their salaries are not increasing.

For that are already struggling to repay their debts and keep up with their financial commitments the lack of salary increase coupled by the soaring cost of living and the hike in VAT could lead to real problems, and could leave many unable to make payments on debts and other financial commitments.

However, the British Chambers of Commerce said that things may not be as bleak as they seem, stating: “Despite a number of businesses suggesting that pay will be frozen, almost as many are suggesting wage rises in 2011. Equally, many businesses say they will deal with reductions in public spending by taking a hit on the bottom line, rather than by reducing staff numbers. This continues a trend we first saw during the recession: firms doing whatever they can to retain staff, even when conditions are more challenging.”