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Households put brakes on spending

Households put brakes on spending

Category: Savings

Updated: 23/01/2012
First Published: 23/01/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Growing pessimism about the state of their finances means a third of Britons plan to cut back on their spending this year, a new survey has revealed.

More people also claim to be saving and intending to pay down their debt, according to the Resolution Foundation, with around a quarter (23%) of adults expecting their household finances to get worse in the next year.

The poll suggests that one third of adults (32%) are now planning to cut back spending in the next year, a sharp rise compared to the one in five (19%) who had frugal intentions back in October.

At the same time, the number of people making monthly savings has jumped from only one in five in October (22%) to almost one in three (30%).

Furthermore, 17% of people said they now plan to reduce their personal debt, compared to 12% back in October.

Worries about money saw one in three people (30%) spend less at Christmas this year, while one in five (19%) claim they cannot afford to go away on holiday this year.

Yet despite the air of pessimism that pervades, a quarter (25%) of those in work still say they expect to get a pay rise this year, with the figure rising to 32% amongst higher earners.

The survey comes just days after it was revealed unemployment had reached its highest level for 16 years.

"Families that are already hard pressed are preparing for yet another very tough year ahead, with a big rise in the numbers planning to cut back spending as well as trying to save and reduce their debts," said Gavin Kelly, chief executive of the Resolution Foundation.

"Given this gloomy backdrop it's a real worry that a new round of cuts to tax credits planned for April will further dampen the spending power of low to middle income families.

"The longer households cut back on spending, the longer it will be before we see real economic recovery."

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