British consumers are preparing for another year of austerity after the declaration in the fall of the Chancellor of the Exchequer, George Osborne, failed to remove the gloomy feelings that marked the UK economy. According to a survey this month conducted by the provider of financial data Markit, on attitudes about family finances, 43% of householders believe their finances will worsen in 2013 compared to 24% who expect their income to improve, according to British newspaper The Guardian.
“Households are headed for another year of low personal finance in 2013. The vast majority of households anticipated that their welfare financial will worsen, or will stagnate next year,”
said Tim Moore, senior economist at Markit, who added:
“Given that three-quarters of all households are not expected to make improvements in their finances, the latest survey shows that domestic consumer demand will remain under pressure in the short term, especially since inflation perceptions remain high and job insecurity is prevalent.”
Osborne was forced to recognize in his statement that growth will be less than expected, but said that there are plans to stimulate investment and long term prospects for the economy.
However, the survey conducted by Markit noted that “the basic situation is that the finances of households are under severe pressure due to lower revenue and higher costs of living.”
More householders have expressed their fear of losing the job, compared with previous month, and the majority of them expect salary increases to remain under the level of inflation, according to the survey.
All five income groups in the Markit index on households were pessimistic about 2013. Regional data have shown that households in Wales have been the most pessimistic, and those from south-west the least pessimistic.
According to The Guardian, a few days after official figures showed that growth in the economy was slower than previously thought in the third quarter, the information that households are preparing for a dark 2013 will discourage the Treasury, which has based a large part of business strategy on a rebound in consumer spending.
Without strong growth in consumer demand, a recovery promised in the latter part of 2013 may not materialize. Companies have not invested in plants and equipment lately and might put back in the drawer the plans if they see that consumers don’t open enough their wallets.
The insolvency company Begbies Traynor said that about 140 store chains are vulnerable to bankruptcy this year if the expected increase in sales will not materialize. The company said the stores that are heavily indebted after excessive borrowing in the years of economic boom, face the threat of significant financial burden if buyers affected by austerity continues to look for bargains and buy online.
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