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18/08/2011

More consumers pessimistic about their financial outlook

Only a quarter (25%) of consumers believe their financial situation will improve over the next six months, according to the insolvency trade body, R3’s Personal Debt Snapshot. This has fallen 10 percentage points from 35% of consumers a year ago.

The report revealed one in five (21%) consumers are deferring big financial decisions, compared to 14% this time last year, while over one in ten (11%) are falling behind paying their bills, compared to 5% in July 2010. The report also found over 44% of people are now struggling to make it to pay day.

R3 Vice-President, Lee Manning, comments:

“It is unsurprising to see consumers pessimistic about their financial future given increased living costs combined with inflationary pressures, (with inflation rising again this week), which is reducing households disposable income.

“The nation’s uncertainty is underpinned by the fact that more people are putting off big financial commitments. It is sensible not to tie yourself into a long and heavy financial obligation if you’re worried about your future financial security.”

The report also revealed fewer people declared they have no savings; 19% said they had no savings compared to a third of people (30%) last quarter.

Lee Manning continued:

“People are aware they need a ‘buffer’ in case they fall on hard times and are therefore beginning to put more money into savings. This change suggests individuals are anticipating further cuts on their household expenditure and will be relying on the money they have put away to get through difficult times.”

Those who struggle to make it to payday, start to feel the pinch 19 days after they receive their monthly pay. The reasons cited for this struggle include credit card repayments (39%), non-essential spending (19%), big ticket purchases (11%) and paying off ‘payday’ loans (11%). While there have been decreases in the proportion who cite mortgage repayments (16%) as the problem.

There has been a significant decrease in the proportion of people who say they struggle to payday as a result of spending on non-essentials, with a fall of 6% from July 2010 to July 2011.

Lee Manning concluded:

“As the cost of living rises, with everyday essentials such as transport, food, petrol and electricity prices increasing there is a shortfall in individuals’ disposable income. This is likely to explain why fewer individuals are spending their money on non-essentials; they are simply unable to. This is already having a significant impact on the consumer economy, as shown by the latest retail figures.”

 

 

ENDS

For further information please contact:
Charlotte Towerton, R3 External Communications Officer
t: 020 7566 4203 m: 07918 161 291 e: charlotte.towerton@r3.org.uk


Methodology note:
ComRes interviewed 2047 GB adults online between 22nd and 24th July 2011. Data were weighted to be representative demographically of all GB adults. Where population figures are mentioned, estimates have been extrapolated using the percentages from the results and adult population figures for Great Britain available from the Office of National Statistics.


R3 Press Office

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.