7:40am Wednesday 25th April 2012
MORE than two in five Britons (44%) feel less confident about their financial position compared to the start of the year, 47% expect the UK to experience a double dip recession and 51% are critical of the Government’s handling of the economy according to new consumer data from HPI research.
The findings are the latest from HPI’s rolling Coalition Consumer study, which explores people’s outlook under the Coalition Government and tracks their attitudes, coping strategies and shopping habits.
In the latest instalment, HPI asked a GB representative sample of more than 1,000 adults to comment on their financial position, their economic outlook, their views on who was responsible for the economic crisis and what would help the country get back on its feet.
The findings provide a snapshot of the consumer mood. While some are adopting savvy coping strategies, others are struggling and a strong sense of anger towards bankers and politicians emerged.
Attitudes define four consumer mindsets
Over six cycles of tracking research, spanning three years, HPI has identified four clear consumer mind sets in terms of how people feel about the position they are in. In each instance, the degree of control exercised correlates with anxiety levels.
Sufferers: 21% of people have already made all the financial cutbacks they can, are struggling financially and are fearful of what the future holds.
Squeezed: 31% of people are worse off but are taking robust action to buy cheaper brand goods, buy second hand and have switched allegiance to cheaper shops.
Cautious: 34% of people are not seriously worse off but have become much more cautious. They watch what they spend and are mindful to save a bit more if they can.
Insulated: 14% claim they are not personally affected but are aware of the problems in the wider economy.
Significantly, over the last three years, the proportion of people suffering has doubled and the insulated group has halved in size.
Across the board, there is growing anxiety. Despite the remedial steps taken, only 29% of people said they felt more confident about their own financial position compared to the start of the year, compared to 44% who felt less confident.
A sign of people living on the financial edge emerged, with the continual rise of people drawing on savings to support everyday expenditure. Between October, 2009 and February, 2012 the percentage of adults using money they would have saved for day-to-day expenditure has soared by 48% - from 25% of adults to 37%..
Economic confidence
When asked about the UK’s prospects for a double-dip recession, 47% of respondents expected one, whereas 12% did not and 42% said they were not sure.
Only 18% of adults said they felt more confident in the overall UK economic situation than they did at the start of the year - 57% felt less confident. This issue was not just limited to those that were personally worse off.
While 70% of those that said their income had fallen also felt less confident about the economy, 36% of those whose disposable income had gone up also lacked confidence in the economic situation.
The HPI research also dashes any notion that consumer confidence is unduly affected by gloomy headlines. Only four per cent strongly agreed that the recession was not as bad as portrayed by the media, with 56% saying the situation was probably worse.
Government’s handling of the economy
When asked whether the Government was doing a good job in its handling of the economy, 51% disagreed, 22% agreed and 28% were not sure. After recent controversy over the Budget, the popularity of the Government’s handling of the economy related closely to people’s own financial position.
Those whose disposable income had gone up in recent months were most likely to think the Government had done a good job (34%), whereas those whose disposable income had shrunk were most likely to disagree (60%) and half of those disagreed strongly.
Only 20% of people felt the banks had cleaned up their act since the economic slowdown. One in two people (49%) thought banks had not cleaned up their act, rising to 65% of those that had been hardest hit - the sufferers that had already made all the cuts they could to their expenditure.
Prudence returns
One thing that united people was being more careful with how they spent their money compared to six months ago (74%). This approach was prevalent among groups that regarded their disposable income as having gone up (69%) as well as those for who disposable income had gone down (83%).
The findings here point towards sluggish consumer spending in the months ahead. HPI’s research suggests that people’s buying habits involve clearly definable groups that are putting purchases off, shopping around more and more likely to buy second hand.
Blame and growth
When the public was asked which one group they most blamed for making the recession worse, 19% mentioned UK bankers and City financiers, 13% the previous Labour Government and 12% said US bankers and Wall Street financiers. Less than one in 10 respondents (nine per cent) blamed consumers for spending beyond their means.
When asked which one factor would get Britain out of its economic difficulties the top five responses comprised:
1. Better regulation of financial industry and bankers - 15%
2. Government policy to cut the UK deficit - 10%
3. UK pulling out of Europe - 10%
4. Recovery in Europe - nine per cent
5. Promotion of growth rather than austerity measures - nine per cent
Despite the excitement and anticipation about the Olympics or the Queen’s Jubilee celebrations, very few think this will spark economic confidence.
Consumer attitudes on what would kick-start the economy were coloured by their own sense of optimism. Those that were pessimistic said the most important factors were the Government cutting the deficit (16%) and waiting for a recovery in Europe (13%).
People with a more optimistic outlook focussed on regulation of the banks (16%) and promotion of growth rather than austerity measures (13%).
Commenting on the new Coalition Consumer data, Juliet Strachan, managing director at HPI, said: “Rather than project the significance of economic figures on households, our research aims to help see recent events through the eyes of consumers, to discover more about how they interpret economic events and react in the way they do their weekly shop, pay their bills and manage their money.
“While the new data suggests there is anger, and underlines the degree to which many people have been impacted by the slowdown, we also have noted that the majority of consumers have reacted to events by taking action.
“For some it is cutting back and changing shopping habits, while others have actually become better money managers and more savvy shoppers. Everyone is feeling anxious and trust in role models is at a low ebb but many consumers are toughening up and dealing with what they face - many expecting a long road to recovery.”
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