Published on 2 - February - 2011
Cash-strapped consumers report drop in confidenceAs pressures on personal budgets mount, the latest Consumer Confidence Survey reveals the proportion of people who say they have no spare cash has risen to 27%.
According to the survey, released by Nielsen and the British Retail Consortium (BRC), the proportion of people saying they have no spare cash was 6% higher at the end of 2010 than it had been a year earlier and the highest since the survey began in 2005.
Consumer confidence was also found to be lower at the end of last year than the beginning, despite a marginal increase in the final quarter.
In Q4, consumers were said to feel slightly more positive about their job prospects, personal finances and were also less negative about spending - resulting in a 2% increase in consumer confidence in Q4.
However, the BRC believes the uplift is likely to be a seasonal fluctuation in the run-up to Christmas, rather than the start of a fundamental change in mood.
Worryingly, 82% of consumers still believe Britain is still in recession and just 14% believe the country will be out of recession within 12 months.
The main concern for cash-strapped consumers is the rising cost of living, with increasing utility bills and new record high petrol prices, coupled with continuing fears over debt and job prospects.
The survey revealed that fewer people are spending their disposable income on things like holidays, home improvements and new technologies, with many using any extra cash to pay off debts and credit cards. The number of people who said they were saving also dropped from 34% to 31%.
Nielsen UK & Ireland group md Chris Morley said: "There is no doubt that many consumers are under a lot of financial pressure and little wonder why over a quarter feel they have no spare money whatsoever. Looking forward in to 2011, discretionary expenditure is expected to be squeezed harder with household income for most shoppers unlikely to keep pace with the rising cost of living. We anticipate a consumer who continues to feel the pinch, who has major concerns about meeting the cost of essentials and basic living expenses."
The findings form part of Nielsen's Global Consumer Confidence Survey, which saw 25 out of 52 countries polled reporting a loss in confidence in Q4. Despite Britain's slight uplift since Q3, confidence levels here still remain lower than the global average of 90. However, Britain's figure of 77 is still higher than troubled neighbour Ireland, whose confidence levels fell three points to 65 in Q4.
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