Debt worries rise as consumer confidence plummets

09 June 2008 / by Joy Tibbs
Higher living expenses and weakness in the UK property market have led to a significant downturn in consumer confidence. According to the British Retail Consortium (BRC) and market research firm Nielsen, confidence fell to a record low in May.

The survey, in which more than 1,000 consumers were asked how they felt about job prospects, personal finances, spending intentions and major concerns, revealed that a third of the population has serious concerns about the general economy.

“The Nielsen/BRC UK Consumer Confidence index now stands at 79," said Mike Watkins, senior manager, retailer services. "To put this into context, this time last year the index stood at 91, which was the lowest score we had seen since we began polling this survey in 2003. The fact that the score has plummeted a further 12 points is telling of how much consumers are being stretched.

“Our survey reveals that 55 per cent of people ranked inflation as their main concern during periods of economic downturn while 39 per cent said high interest rates. Unfortunately they are being hit with both at present. This has caused significant unease among consumers.”

The results showed that 60 per cent of people considered job prospects to be either not so good or bad compared with 50 per cent in 2007. Meanwhile, 57 per cent thought their own personal finances would be not so good or bad over the next year compared with 46 per cent six months ago and three quarters of people feel now is not a good time to spend on items they want or need.

Major concerns among respondents included the economy (31 per cent) followed by debt (26 per cent) and work/life balance (20 per cent). And, while more people said they had less spare cash compared with respondents back in October 2007 – 22 per cent compared with 18 per cent – almost as many people were using spare cash to top up savings accounts, with 37 per cent able to do so compared with 38 per cent in October.

BRC director general, Stephen Robertson, said: “With one in five people saying they have no spare cash, the highest ever recorded by this survey, customers are telling us they are cutting back on spending on all sorts of non-essentials. Clothes, footwear, furniture and new technology are the biggest casualties as consumers attempt to manage their money.

“It’s clear we are seeing the effects of customers’ concerns about the future and about their own levels of debt.”

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