Which? executive director Richard Lloyd said:
“We have avoided a triple-dip recession, but consumers are still feeling the pinch and many expect their household finances to remain under severe pressure for months to come. Our figures show a third of us feel squeezed with millions cutting back on essentials or resorting to high cost credit.
“Consumer spending accounts for around 60% of GDP so it is critical that consumers are at the heart of the Government’s economic recovery plans.”
The Which? Consumer Insight Tracker reveals just one in five (21%) of us think that the UK economy will improve in the next year, with over a third (37%) believing their financial situation will get worse. Nearly three-quarters (72%) of consumers rate the state of the UK economy at the moment as poor, with fewer than one in ten (8%) rating it good.
The Which? Squeezometer shows that:
· A third (34%) of households are feeling the squeeze in some way.
· 7.4 million households, over a quarter (28%), are cutting back on essential spending.
· Three million households (12%) are cutting back and getting into debt.
· Over two million households (8%) have defaulted on a housing or bill payment.
· Our latest research shows that women are more likely to be feeling the squeeze than men (38% compared to 31%).
· It also shows evidence of the squeezed middle – those in the third income quintile earning between £21,500-£34,000 – who are feeling more squeezed than those earning £12,300-£21,500 (41% and 36% respectively.)
The Which? Consumer Insight tracker: an online resource, including the Which? Squeezometer, provides 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.
The Which? Squeezometer: is based on the Which? Consumer Insight Tracker Poll and categorises groups financial difficulties into a series of five graded levels. Respondents are classified according to the most severe difficulty they said they have experience
· Level 1 – Reducing spend on essential items
· Level 2 – Reducing spend on essential items and taking money out of savings
· Level 3 – Reducing spend on essentials and took out a loan or credit card, borrowed from friends / family or took out an authorised credit card
· Level 4 – Took out an unauthorised overdraft or payday loan
· Level 5 – Defaulted on a bill, rent or mortgage payment
Previous Which? research showed that on average each UK household has reduced their spending by over £3,000 a year since 2007, dealing a devastating blow to the economy and threatening a return to growth.
Consumer spending is the largest aspect of UK GDP making up 60.4% of total spending in the economy in 2012. (Cebr analysis of ONS data).