New Which? research paints a gloomy picture of consumers caught up in a long squeeze that sees many unable to save, too worried to spend and unlikely to cope with financial shocks.
Which?’s latest Quarterly Consumer Report shows more than half (54%) of consumers expect their household budget to be tighter this year and 42% of people expect the economy to get worse in the next 12 months. This is having a serious impact on financial resilience; we’ve found four in ten (41%) consumers already find it tough to cope with an unexpected expense.
We reveal a ticking time bomb of people who are not saving for their retirement, with half (50%) of people still not paying in to a pension and more than a third (35%) saying they have no intention of doing so in the near future. The top reason (41%) why people don’t have a pension is they can’t afford it, and the majority of people (58%) who aren’t retired don’t feel confident they’ll be able to live comfortably in retirement.
The findings show that far from topping up their savings or paying into a pension, many people are more likely to resort to using credit or dipping into their savings just to get by, with over a third (35%) increasing the total level of debt they have in the past month. In the last month alone:
- almost 6 million households dipped into their savings to cover monthly household spending on items like food and utility bills;
- 7 million households cut spending on every day essentials like food, utility bills, housing costs and fuel;
- 4 million households used credit to pay for food, with 44% of the population saying they are likely to cut spending on food in the next few months.
Which? executive director, Richard Lloyd, said:
“Our research paints a gloomy picture of worried and pessimistic consumers, with a majority expecting their household budget to get even tighter than last year. People have as little money to spend now as they had at the start of the recession four years ago, with many simply unable to prepare for unexpected costs or for their retirement.
“There’s no doubt that the big squeeze has turned into a long squeeze. The assault on real incomes is unlikely to change for the better soon, with consequences not only for individual consumers but also for economic recovery.”
Notes to editors:
1. Primary Research Methodology – Populus, on behalf of Which?, interviewed 2060 UK adults online between 4th and 7th January 2013. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules
2. Which? Spending Power Index Methodology – Which? and the Centre for Economics and Business Research (CEBR) examined the macroeconomic trends in the British economy and created the Which? Spending Power Index measuring monthly purchasing power for UK households.
3. Which? Quarterly Consumer Report: This is the third report in a series monitoring how people feel about their current financial situation. It includes the Which? Spending Power Index which tracks month on month changes in consumer purchasing power. http://www.which.co.uk/about-which/who-we-are/quarterly-consumer-reports/
4. The Which? Consumer Insight tracker is an online resource providing a uniquely detailed picture of today’s consumers. The tracker, updated monthly, has data on consumer spending, attitudes and behaviour, and can be filtered by age, income, gender, region or political affiliation. http://www.which.co.uk/consumerinsight