/ Money

Will the Autumn Statement help ease the squeeze?

Wrench squeezing money

When the Chancellor delivers his Autumn Statement today, he’ll be feeling better than this time last year. Since then, the economy’s started to grow and consumers are feeling more confident about its prospects.

Our latest survey finds that two in five people think the economy will grow next year. It was just one in five people at this point last year.

Announcements from the Government this week have also highlighted their intention to tackle the cost of energy bills. Given that 81% of people in our recent poll said that cutting energy costs would improve their standard of living (with nearly half saying it would make a ‘great difference’), it’s encouraging that the Government has listened to our calls to cut bills.

The squeeze on consumers

All of this is clearly good news. But we still have a long way to go. In the same survey we find that only 16% of people think that renewed growth in the economy has fed through into their standard of living. And more people than not think their personal finances will get worse next year.

This is a reflection of the squeeze on consumers that we have been highlighting for some time, and is the reason why these welcome measures on energy bills must only be the start. Much more will need to be done in future to ensure that both living standards keep pace with growth in the economy, and more people feel the squeeze ease.

Of course, we’ll be working to make that happen. So we want to hear from you about how the costs of essentials are impacting on you. Are you starting to feel the squeeze lifting? What would make the biggest improvement to your living standards in the future?

Comments
Profile photo of Patrick Taylor
Member

” Our latest survey finds that four in 10 people think the economy will grow next year. It was just one in five people at this point last year.”

Forgive me for being dense but I cannot understand why the two related figures are quoted in two different scales. Is not one out of five the same as two out of ten?

Statistics are always open to abuse and I think it important that the matter is not made more opaque by using different scales. I am of course excited there has been 100% improvement in peoples sentiment on the likelihood of growth. : )

Profile photo of Patrick Steen
Member

Tweaked to two in five, thanks Diesel.

Profile photo of malcolm r
Member

dieseltaylor, it may be of course that last year only 5 people took part in the first survey, of whom one was positive. This time maybe 10 people took part, with 4 positive. Which? might have been realistic in not extrapolating the results? Just a theoretical possibility – perhaps they asked round the office..

Profile photo of Patrick Steen
Member

Hi Malcolm, it’s from a survey of more than 2,000 UK consumers 🙂

Profile photo of malcolm r
Member

Patrick, I’m sure it was! I’m confident Which? treats surveys appropriately. Just a possible, but most unlikely, explanation for such a presentation of numbers!
🙂 🙂

Profile photo of Patrick Steen
Member

You can read a round-up of all of the announcements from this year’s Autumn Statement here:

http://www.which.co.uk/news/2013/12/autumn-statement-2013-the-big-announcements-343806/

Profile photo of John Ward
Member

An interesting point from the Autumn Statement : “A combination of low interest rates and some improvement in house price affordability means that mortgage costs are close to historic lows. Mortgage repayments average 27% of household disposable income, compared with almost 50% in 2007 and a long-term average of 36%. Mortgage interest rates would need to rise by almost 4 percentage points for interest payments to reach the same proportion of income as in 2007.” Yet, despite this, an awful lot of households are feeling very badly off, obviously because incomes are lagging behind expectations and the prices of many goods and services are continuing to rise faster than incomes. Expenditure on items that are arguably inessential but have become embedded in household budgets seem particularly prone to above-inflation rises. The restraint of council tax increases and the reduction in the basic rate tax-take doesn’t seem to be making people feel better-off either. For many people things are still getting worse as social paymentsare reined in and property rentals rise [or the space available for the same outlay shrinks]. More people in work and fewer people unemployed [still four years to go before we get down to 7%], and a slightly-faster-than-forecast growth in output, might boost confidence and create a sense of well-being for those benefitting, but economic impacts are rarely distributed equitably and the expectations of a particular standard of living remain elusive since a general sense of insecurity and distrust of government and commerce are the prevailing sentiments. A recent report showed how personal savings have been massively depleted over the last few years and people will not feel good until they have been able to restore their usual level of financial security. In my view the squeeze will persist for a few more years yet.

Profile photo of John Ward
Member

I made a mistake above with the unemployment forecasts. It is currently 7.6% and predicted to fall to 7% in 2015 [two years away, not four]. Unemployment is then expected to fall further to 5.6% by 2018. 7% unemployment is the critical figure because that is when the Bank of England will release the brake on interest rates; let’s hope they do it gently.

Profile photo of Beryl
Member

What is the point of attempting to revive our high streets shops with Tax Incentives when VAT remains at 20 percent, some consumers having to use up their savings, others borrowing and getting into debt because much of their shrinking disposal income is being drained by ever increasing price increases on basic essentials such as rent, mortgage repayments, energy, water, food, fuel and transport just to survive?

It was a shrewd move by the Govt to neutralise the effect of the energy crisis by bringing forward Ed Davey’s speech so that it would be overshadowed by other issues contained in The Chancellors Autumn Statement. I hope Which? will keep up the pressure on the Energy Co’s until they are held to account for their continuing above inflation price hikes.

Profile photo of malcolm r
Member

We, as a country, got ourselves into an economic problem, partly due to government profligacy, partly due to our habit of living with high personal debt, and precipitated by incompetent international banking. Inevitably our living standards suffered – the debt has to be reduced to manageable levels. Whether we call the present policy “austerity” or “prudence” there is a slow recovery that, equally inevitably, will raise living standards. It took a few years for our past to catch up with us, and it will no doubt not be an overnight return to more prosperity. I dread to think where we would be now if we had not taken steps to cut national and local government spending.

Profile photo of John Ward
Member

Yes, I think we’ve had a much softer landing than we were entitled to expect. We should also remember that not every item in our costs of living has gone up in excess of inflation – last year’s long bad winter had a lot to do with our high energy bills – and some problems are due to lifestyle choices. In a smart political move, the Chancellor seems to be progressively retracting all those expenses that were on an accelerating curve like road fuel duty and regulated rail fares and is curbing council taxes and business rates which should have a stabilising effect on the price of goods and services. Having said that, for many people the things that have gone up steeply account for a disproportionate amount of their budget so the squeeze is even more painful for them.