Economy: Consumer Confidence Falters

Spending is down and so are savings, experts say.

Spending is down and so are savings, experts say.

A recent study shows that only around 25% of people in the UK believe that their financial situation will improve over the next six months.

This figure is a significant fall from a year ago, which saw 35% of Britons hopeful about their economic prospects.

Spending down

One in five people, or 20%, are deferring financial decisions. In addition, one in ten people are falling behind in bill payments. That means that the percentage has doubled from July 2010, which saw around 5% of people behind in their bills.

Surveys suggests that around 44% of British people are currently struggling to make ends meet between paycheques.

This effect can clearly be seen in retail sales, which have been relatively stagnant in recent months. People are less likely to make big ticket purchases, data shows, and are cutting back on spending for non-necessities.

Though they have also been affected, staples such as food and petrol have not been as hard hit as clothing and electronics retailers.

Savings down

Other studies reveal that a shocking 19% of people have no savings at all put aside, around a third of Britons deciding to stop making contributions into their pension pots.

Experts say that this can be explained by the substantial rise in inflation, which has made the prices on everyday household goods rise. Under pinched household budgets, many feel that they have no money left over to save, or report that they feel that saving is a luxury.

Because savings are diminishing throughout the country, people are feeling the pinch of their cashflow around 19 days after they receive their monthly pay, surveys found. With more than a week left until payday, many have already spent their salaries on credit card or “payday” loan repayments.

Despite the intense pressure that household budgets face today, experts recommend saving by cutting back on non-necessities if at all possible. Saving should be stopped only as a last resort, they say, and can make a world of difference in your or your family’s future.

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