Table of Contents
Issues in the Market
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- Key issues covered in the report
- Abbreviations
Future Opportunities
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- An escape from the gloom of the slowdown…
- …and a return to stability for many
- Not everyone is buying into the new prudent mindset
- When will reality hit home for the younger generation?
Market in Brief
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- An unusual recession
- Half of the population are pretty much unaffected by the slowdown…
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- Figure 1: Impact of the downturn, November 2009
- …and two thirds describe their financial situation as fairly stable
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- Figure 2: Personal financial situation, November 2009
- Watchful, but not panicking
- ‘Business as usual’ for most people
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- Figure 3: The slowdown segmentation, November 2009
- Saving is at the top of the agenda for 2010
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- Figure 4: Financial priorities over the previous year and coming year, November 2009
- Politicians’ tough talk is filtering through
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- Figure 5: Expectations of macroeconomic changes, November 2009
- Debt repayment still on the cards?
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- Figure 6: Expectations of household financial changes, November 2009
Background to the Credit Crisis
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- Key points
- Recession timeline – from panic to acceptance
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- Figure 7: Major financial and economic developments, 2006-09
- Roots in lax lending…
- …but the recession is about much more than that
- The impact on the UK
- The banking crisis turns into a full-blown recession
- Authorities attempt to boost the economy
Broader Economic Climate
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- Key points
- Key macroeconomic indicators
- RPI returns to positive territory
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- Figure 8: BoE base rate and RPI, 2003-09
- Unemployment ticks upwards
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- Figure 9: Unemployment levels, seasonally adjusted, 2003-09
- The housing market
- A remarkable recovery in house prices…
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- Figure 10: Annual house price changes, Nationwide and Halifax indices, 2002-09
- …but one that’s built on low volumes
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- Figure 11: Mortgage approvals, 2002-09
- Consumer credit and saving
- A greater focus on saving – or at least on not spending
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- Figure 12: The UK savings ratio, 1990-2009
- Further signs of a new prudence?
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- Figure 13: Gross new consumer credit, 1999-2010
- Figure 14: Gross new credit card lending and amount outstanding, 2003-09
- Insolvencies jump in the second half of 2008
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- Figure 15: Individual insolvencies in England and Wales (seasonally adjusted), Q1 2002-Q2 2009
Then and Now – Parallels with 1991-95
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- Key points
- How are the comparisons changing?
- A longer and more severe recession than the 1990s
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- Figure 16: Quarterly GDP change, 1986-95 and 2003-09
- No more levers left to pull?
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- Figure 17: Average Bank of England base rate, 1986-95 and 2003-09
- House prices avoid the paralysis seen in the 1990s
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- Figure 18: House price changes, 1986-95 and 2003-09
- Unemployment – can it confound economic history?
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- Figure 19: UK unemployment, 1986-95 and 2003-08
Consumer Sentiment
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- Key points
- Consumer confidence bounces back
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- Figure 20: UK consumer confidence index, 2000-10
- A good time to spend?
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- Figure 21: Spending and saving confidence, March 2001-December 2009
- Intended financial activity increases – with debt the priority
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- Figure 22: Savings, investment, borrowing and debt repayment – consumers’ expected activity, Jun 02-Dec 09
- House prices – further signs of a fragile market?
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- Figure 23: Expected mortgage and property purchase activity, Q3/Q4 2002-Q3/Q4 2009
Consumers’ Financial Confidence and Future Prospects
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- Key points
- Healthy – or in trouble?
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- Figure 24: Personal financial situation, November 2009
- Still waiting on the consumer recession?
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- Figure 25: Personal financial situation, December 2008-November 2009
- The young, the old and the affluent – insulated from the slowdown?
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- Figure 26: Personal financial situation, by age and socio-economic group, November 2009
- Worried – but not yet panicking
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- Figure 27: Financial prospects, November 2009
- Measured optimism?
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- Figure 28: Financial prospects, December 2008-November 2009
- Affluence and security
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- Figure 29: Financial prospects, by age and socio-economic group, November 2009
Impact of the Recession on Consumers
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- Key points
- Have people even noticed the crunch?
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- Figure 30: Impact of the downturn, November 2009
- Mortgage holders feel the benefit…
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- Figure 31: Impact of the downturn among mortgage holders, November 2009
- …but older people are suffering
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- Figure 32: Impact of the downturn, by age and socio-economic group, November 2009
Are Consumers Thriving, or Feeling the Pinch?
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- Key points
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- Figure 33: The slowdown segmentation, November 2009
- Making ends meet – but risking slipping into the red
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- Figure 34: Financial situation, by target groups, November 2009
- Professionals and older people are thriving
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- Figure 35: Target groups, by age and socio-economic group, November 2009
- Footloose and fancy-free
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- Figure 36: Target groups, by children in household and working status, November 2009
- The security of savings
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- Figure 37: Financial products owned, by target groups, November 2009'
- Employment is the key
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- Figure 38: Change in employment situation in the last year, by target groups, November 2009
Managing Money in a Slowdown
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- Key points
- A nation of money managers?
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- Figure 39: Attitudes towards managing your money, November 2009
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- Figure 40: Attitudes towards managing your money, by money management target groups, November 2009
- Are the Spendthrifts attempting to avoid facing up to reality?
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- Figure 41: Financial situation at the moment, by money management target groups, November 2009
- On top of their finances, but worried about what’s to come…
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- Figure 42: Confident about financial situation over the next year, by money management target groups, November 2009
- …and already feeling the impact of the slowdown
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- Figure 43: Impact of economic downturn on overall financial situation, by money management target groups, November 2009
- Young and carefree
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- Figure 44: Money management target groups, by gender, age, working status and socio-economic group, November 2009
Consumers’ Changing Financial Priorities
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- Key points
- Time to take control of money…
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- Figure 45: Financial priorities over the previous year and coming year, November 2009
- …but will the New Year resolutions stick?
- The Thriving – is the hard work over?
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- Figure 46: Financial priorities over the last year/change in financial priorities over the next year, by target groups, November 2009
- The cost of the recession on long-term planning
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- Figure 47: Financial priorities over the last year/change in financial priorities over the next year, by impact of economic downturn on overall financial situation, November 2009
- The Worriers looking to escape the debt trap
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- Figure 48: Financial priorities over the last year/change in financial priorities over the next year, by money management target groups, November 2009
- Debts a priority for the ‘making ends meet’ generation
- Young and old plan to spend on themselves
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- Figure 49: Financial priorities over the last year/change in financial priorities over the next year, by age, November 2009
- Easier to take a long-term view when the short term is sorted
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- Figure 50: Financial priorities over the last year/change in financial priorities over the next year, by socio-economic group, November 2009
Consumers and the Macroeconomic Climate
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- Key points
- A recognition of the tough times to come
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- Figure 51: Expectations of macroeconomic changes, November 2009
- Life’s hard for some – and it’s going to get harder
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- Figure 52: Expectations of macroeconomic changes, by target groups, November 2009
- Do personal circumstances colour macro views – or vice versa?
- Tailoring the message to fit the mindset
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- Figure 53: Expectations of macroeconomic changes, by financial confidence, November 2009
- Regional variations hint at different perspectives…
- …and older people show the benefit of a bit of perspective
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- Figure 54: Mean expectations of macroeconomic changes, by gender, age, region and socio-economic group, November 2009
Consumers and their Household Finances
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- Key points
- Incomes up, debts down…
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- Figure 55: Expectations of household financial changes, November 2009
- …but are people expecting their savings to be hit?
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- Figure 56: Expectations of household financial changes, by impact of the slowdown, November 2009
- Robbing Peter to pay Paul
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- Figure 57: Expectations of household financial changes, by target groups, November 2009
- Will younger people face a reality check?
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- Figure 58: Expectations of household financial changes, by gender, age, region and socio-economic group, November 2009
Household Discretionary Spend
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- Key points
- Saving cash – the new leisure activity?
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- Figure 59: Discretionary spending, March and November 2009
- Affordable treats for those who are feeling the pinch
- What are the essential inessentials?
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- Figure 60: Discretionary spending, by target groups, November 2009
- Spendthrifts showing little sign of cutting expenses
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- Figure 61: Discretionary spending, by money management target groups, November 2009
Appendix – Consumers’ Financial Confidence and Future Prospects
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- Current financial situation
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- Figure 62: Financial situation at the moment, by demographics, November 2009
- Confidence over the coming year
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- Figure 63: Confident about financial situation over the next year, by demographics, November 2009
Appendix – Impact of the Recession on Consumers
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- Figure 64: Impact of economic downturn on overall financial situation, by demographics, November 2009
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Appendix – Are Consumers Thriving, or Feeling the Pinch?
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- Figure 65: Target groups, by demographics, November 2009
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Appendix – Managing Money in a Slowdown
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- Figure 66: Money management target groups, by demographics, November 2009
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Appendix – Consumers’ Changing Financial Priorities
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- Figure 67: Most popular financial priorities over the last year, by demographics, November 2009
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- Figure 68: Next most popular financial priorities over the last year, by demographics, November 2009 (continued)
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- Figure 69: Most popualr change in financial priorities over the next year, by demographics, November 2009
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- Figure 70: Next most popualr change in financial priorities over the next year, by demographics, November 2009 (continued)
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- Figure 71: Financial priorities over the last year/change in financial priorities over the next year, by financial situation at the moment, November 2009
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- Figure 72: Financial priorities over the last year/change in financial priorities over the next year, by confident about financial situation over the next year, November 2009
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- Figure 73: Financial priorities over the last year/change in financial priorities over the next year, by impact of economic downturn on overall financial situation, November 2009
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Appendix – Consumers and the Macroeconomic Climate
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- Figure 74: Expectations of macroeconomic changes, by demographics, November 2009
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Appendix – Consumers and their Household Finances
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- Figure 75: Expectations of household financial changes, by demographics, November 2009
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