Consumers planning to cut back in UK

08 July 2010

LONDON: A majority of shoppers in the UK are planning to reduce their expenditure levels this year, as popular anxiety in the country grows.

The Daily Telegraph, the newspaper, commissioned TNS, the research firm, to survey a panel of consumers in order to find out current attitudes and behaviours among members of the public.

Overall, 73% of participants were hoping to trim their budgets, compared with just 44% who agreed with this statement in a similar poll six months ago.

The primary contributors to this trend included widespread concern related to the employment market and the financial climate as a whole.

Elsewhere, 82% of respondents with children expected to cut back in 2010, according to the study.

"People are getting much more nervous about their economic situation, the foundations of their financial security have been shaken," said Sue Homeyard, managing director of TNS information services,

"People with kids are generally more prudent. They tend to have a more careful mindset."

One factor which may have exerted an impact in this area is the recently-announced 2% increase in the value-added tax applied to almost all goods and services.

It is estimated that the typical family will be required to spend £400 ($607; €484) extra on shopping a year as a result.

Richard Hyman, chief retail adviser to Deloitte, the consultancy, suggested this decision, in combination with a range of other austerity measures, means "reality has kicked in for many consumers."

"It is the first time that many people realised that for all the talk about recovery, in the real world they will have less money in their pockets," he argued.

"If interest rates go up, alongside an increase in VAT in the New Year, and suddenly people will be feeling a lot less wealthy and they will spend less. This is going to make life awfully tough on the high street."

Data sourced from Daily Telegraph; additional content by Warc staff