Predictions of an increase in consumer spending might paint a rosy picture of economic recovery, but if that comes at the cost of your savings, we need a Budget that will put money back in people’s pockets.
We’re on the road to financial recovery! Or so the latest figures and projections for increased consumer spending might make you hope.
The more sceptical among us might be tempted to question such rosy predictions. Spending may well be up, but how could it not be with the price of fuel at an all time high and the cost of food on the increase?
And while figures suggest that spending on ‘discretionary’ items, like clothes and shoes, has also gone up, the reality is that there’s only so long we can put off buying such ‘non-essentials’ as this age of economic uncertainty rumbles on.
Are you eating into your savings to buy the basics?
Our latest research shows just how shaky consumer confidence remains. More than half of us feel worse off than in 2007, and four in ten people have reported a decline in household income. ‘Worry’ is the prevailing emotion for many of us – three in ten are anxious about the next year.
High on the list of worries is the price of everyday essentials like energy, fuel and food. And, as we’ve previously mentioned, one in four people told us that they had to eat into their savings just to buy food and other daily essentials. And one in five had even gone into debt for this.
Without a bit of help from George Osborne’s Budget tomorrow, these figures are unlikely to improve – less than half of people say they’re coping on their current incomes.
Understandably, many people are looking for ways to make their money go further, such as comparing prices online and visiting second hand shops. You even shared tips for saving money on food bills here on Which? Conversation, such as cooking with beans and lentils.
But the news that people are cannibalising their existing savings to pay for necessities sets all sorts of alarm bells ringing, not just now but for the future.
Simply postponing the problem
While dipping into your savings might make for a boost in spending now, all this is likely to do is postpone economic problems until further down the line. A time when savings people had been relying on to pay for their future wellbeing have vanished.
So, it’s vital that tomorrow’s Budget takes into account consumer concerns. As Which? executive director Richard Lloyd puts it:
‘We need a Budget that will put money back in people’s pockets, helping households to cope with rising fuel, energy, mortgage and food costs. That’s what will really boost consumer confidence and spending power, which is essential for getting sustainable growth going in the real economy.’
How are your finances looking at the moment? Are you feeling the squeeze or experiencing the green shoots of recovery, and how is it impacting your buying and saving habits?
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