Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The economic environment
- Economic growth continues to be fragile
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- Figure 1: GDP quarterly percentage change, Q1 2005-Q4 2011
- Two plus years of squeezed household incomes continue
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- Figure 2: Monthly change in RPI and average weekly earnings, January 2008-December 2011
- Consumers’ financial well-being
- More than three fifths categorise their finances as OK or healthy...
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- Figure 3: Household financial situation, December 2011
- …but three quarters say they’ve been affected by the slowdown
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- Figure 4: Impact of the slowdown, December 2011
- Many experienced deterioration in personal finances over the past year
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- Figure 5: Change in financial situation over the last year, December 2011
- Expectations and priorities for 2012
- Financial confidence over the next year
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- Figure 6: Financial confidence, December 2011
- Macroeconomic expectations
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- Figure 7: Macroeconomic expectations for the coming year, December 2011
- Personal finance expectations
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- Figure 8: Personal financial expectations for the coming year, December 2011
- Financial priorities
- How consumer views are shaped
- Factors affecting household finances
- Engagement in personal finance and economic news
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- Figure 9: Consumer engagement in personal finance and economic news, December 2011
- What we think
Issues in the Market
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- What are the biggest factors affecting consumer finances?
- Are consumers ready to open up their wallets in 2012?
- How closely do people monitor the effects of the slowdown?
- How influential is the media in shaping people’s expectations?
Future Opportunities
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- The price of financial well-being is eternal vigilance
- Preventing bias from clouding reality
Economic Environment
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- Key points
- The eurozone crisis
- GDP declines in Q4 2011
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- Figure 10: GDP quarterly percentage change, Q1 2005-Q4 2011
- Household income squeeze set to continue into 2012
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- Figure 11: Monthly change in RPI and average weekly earnings, January 2008-December 2011
- UK unemployment expected to tick up
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- Figure 12: UK unemployment rate, seasonally adjusted, January 2006-November 2011
- House prices going nowhere
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- Figure 13: Quarterly change in the Halifax house price index, Q1 2006-Q4 2011
Consumer Spending and Saving
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- Key points
- Savings ratio moves upward as consumers prepare for a difficult 2012
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- Figure 14: Quarterly changes in GDP* and the savings ratio, 1975-Q3 2011
- Britons taking a responsible approach to consumer credit
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- Figure 15: Gross and net consumer credit, seasonally adjusted, 2001-11
- Cost of consumer credit
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- Figure 16: Average quoted household consumer credit rates, Jan 2006-Jan 2012
- Mortgage lending has flattened out
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- Figure 17: Gross and net secured lending, seasonally adjusted, December 2001-December 11
- Low mortgage rates helping to support consumer spending
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- Figure 18: Average quoted household mortgage rates, Jan 2006-Jan 2012
- Write-offs have fallen to pre-crisis levels…
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- Figure 19: Write-offs of loans made to individuals, March 2006-Sept 2011
- …but rising unemployment could push levels back up
Consumer Sentiment
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- Key points
- 2012 starts with a ‘January bounce’ in consumer confidence
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- Figure 20: UK consumer confidence, January 1997-Sept 2011
- Confidence levels likely to be volatile throughout the year…
- …but could end the year up
Household Financial Situation
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- Key points
- Over three fifths view their current financial situation as healthy or OK
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- Figure 21: Household financial situation, December 2011
- Overall household financial situation improves marginally in 2011
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- Figure 22: Household financial situation, December 2010-December 2011
- Whose finances are solid or better?
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- Figure 23: Household financial situation, demographic overview, December 2011
- Who’s at risk?
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- Figure 24: Household financial situation, demographic overview, December 2011
- The plight of the self-employed
Impact of the Economic Slowdown
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- Key points
- The slowdown has affected over three quarters of British consumers
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- Figure 25: Impact of the slowdown, December 2011
- Signs that the impact of the recession is starting to fade?
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- Figure 26: Impact of the slowdown, December 2010-December 2011
- People not necessarily assessing their situation throughout the year
- High earners and retirees proving to be the most resilient
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- Figure 27: Impact of the slowdown, demographic overview, December 2011
Change in Personal Finances
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- Key points
- More than two fifths say their finances have deteriorated over past year
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- Figure 28: Change in financial situation over the last year, December 2011
- Things have steadily worsened for consumers since the recession ended...
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- Figure 29: Change in financial situation over the last year, December 2010 vs. December 2011
- ...but for a minority things have improved
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- Figure 30: Change in financial situation over the last year, demographic overview, December 2011
Financial Confidence
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- Key points
- Most are concerned about their prospects but expect to be fine
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- Figure 31: Financial confidence, December 2011
- Financial confidence levels relatively stable going into 2012...
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- Figure 32: Financial confidence, December 2010-December 2011
- …but with plenty of potential for improvement
- Who believes they’ll be just fine or better?
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- Figure 33: Financial confidence, demographic overview, December 2011
- Who’s anxious about their prospects?
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- Figure 34: Financial confidence, demographic overview, December 2011
Financial Wellbeing Segmentation
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- Key points
- The concerned to the carefree
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- Figure 35: Financial wellbeing segmentation, December 2011
- Cause for Concern
- Under Control
- Flourishing
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- Figure 36: Responses to select statements about financial wellbeing, by financial wellbeing segmentation, December 2011
- Change in personal finances over the past year
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- Figure 37: Change in financial situation over the last year, by financial wellbeing segmentation, December 2011
Macroeconomic Expectations
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- Key points
- Consumers bearish on 2012 economic prospects…
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- Figure 38: Macroeconomic expectations for the coming year, December 2011
- …but spirits could be lifted by year’s end
- Consumers tend to have a subjective view of the economy
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- Figure 39: Macroeconomic expectations for the coming year, by consumer segmentation, December 2011
- Lifestage influential in shaping expectations
Personal Finance Expectations
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- Key points
- Squeeze on household finances expected to continue
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- Figure 40: Personal financial expectations for the coming year, December 2011
- Expectations vary according to financial wellbeing
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- Figure 41: Personal financial expectations for the coming year, by financial wellbeing segmentation, December 2011
- Retirees expect a decline in income and saving levels…
- …while 25-44-year-olds are reining in debt
Financial Priorities
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- Key points
- A cautious and financially engaged consumer
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- Figure 42: Personal financial priorities over the next 12 months, December 2011
- For many saving is a luxury
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- Figure 43: ‘Any important’ personal financial priorities over the next 12 months, by financial well-being segmentation, December 2011
- Demographic overview
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- Figure 44: ‘Any important’ personal financial priorities over the next 12 months, by financial well-being segmentation, December 2011
Discretionary Spending
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- Key points
- Simple pleasures top the list of spending priorities
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- Figure 45: Discretionary spending, December 2010 vs. December 2011
- Are consumers starting to tire of being thrifty?
- Discretionary spending and financial wellbeing
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- Figure 46: Discretionary spending, by financial wellbeing segmentation, December 2011
Factors Affecting Household Finances
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- Key points
- Rising living costs by far the biggest issue affecting British adults
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- Figure 47: Financial events and concerns, December 2011
- Redundancies and pay freezes less of an issue
- All affected but some consumer segments less impacted than others
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- Figure 48: Financial events and concerns, by financial wellbeing segmentation, December 2011
Engagement in Personal Finance and Economic News
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- Key points
- Most consumers paying attention to what is going on in the economy
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- Figure 49: Consumer engagement in personal finance and economic news, December 2011
- The influence of the media on personal finance expectations
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- Figure 50: Consumer engagement in personal finance and economic news, by personal finance expectations, December 2011
- Minor variations in engagement by different segments of the population
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- Figure 51: Consumer engagement in personal finance and economic news, by financial well-being segmentation, December 2011
Appendix – Household Financial Situation
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- Figure 52: Household financial situation, by demographics, December 2011
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Appendix – Impact of the Economic Slowdown
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- Figure 53: Impact of the economic downturn, by demographics, December 2011
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Appendix – Change in Personal Finances
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- Figure 54: Most popular state of personal finances compared to a year ago, by demographics, December 2011
- Figure 55: Next most popular state of personal finances compared to a year ago, by demographics, December 2011
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Appendix – Financial Wellbeing Segmentation
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- Figure 56: Financial wellbeing segmentation, by demographics, December 2011
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Appendix – Macroeconomic Expectations
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- Figure 57: Macroeconomic expectations for the coming year, by financial confidence, December 2011
- Figure 58: Macroeconomic expectations for the coming year, by change in financial situation over the last year, December 2011
- Figure 59: Macroeconomic expectations for the coming year, by current household financial situation, December 2011
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- Figure 60: Consumer economic expectations by interest rates, by demographics, December 2011
- Figure 61: Consumer economic expectations by house prices, by demographics, December 2011
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- Figure 62: Consumer economic expectations by unemployment, by demographics, December 2011
- Figure 63: Consumer economic expectations by taxes, by demographics, December 2011
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- Figure 64: Consumer economic expectations by the UK’s economic growth, by demographics, December 2011
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Appendix – Personal Finance Expectations
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- Figure 65: Personal financial expectations for the coming year, by financial confidence, December 2011
- Figure 66: Personal financial expectations for the coming year, by change in financial situation over the last year, December 2011
- Figure 67: Personal financial expectations for the coming year, by current household financial situation, December 2011
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- Figure 68: Consumer economic expectations by household’s income, by demographics, December 2011
- Figure 69: Consumer economic expectations by savings, by demographics, December 2011
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- Figure 70: Consumer economic expectations by debts, by demographics, December 2011
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Appendix – Financial Priorities
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- Figure 71: Personal financial priorities over the next 12 months, by consumer segmentation, December 2011
- Figure 72: Personal financial priorities over the next 12 months, by financial confidence, December 2011
- Figure 73: Importance given to the attitude ‘Making sure that I don’t fall behind on bills and other financial commitments’, by demographics, December 2011
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- Figure 74: Importance given to the attitude ‘Trying to add to my rainy day savings/emergency fund’, by demographics, December 2011
- Figure 75: Importance given to the attitude ‘Saving for a particular reason (eg holiday, new house, new car, etc)’, by demographics, December 2011
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- Figure 76: Importance given to the attitude ‘Clearing non-mortgage debts (eg credit card, personal loans etc)’, by demographics, December 2011
- Figure 77: Importance given to the attitude ‘Saving for the long-term – pension, retirement savings’, by demographics, December 2011
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- Figure 78: Importance given to the attitude ‘Spending money on enjoying myself and the occasional treat’, by demographics, December 2011
- Figure 79: Importance given to the attitude ‘Overpaying my mortgage’, by demographics, December 2011
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Appendix – Discretionary Spending
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- Figure 80: Discretionary spending, by current financial situation, December 2011
- Figure 81: Discretionary spending, by financial confidence, December 2011
- Figure 82: Discretionary spending, by change in financial situation over the last year, December 2011
- Figure 83: Most popular discretionary spending, by demographics, December 2011
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- Figure 84: Next most popular discretionary spending, by demographics, December 2011
- Figure 85: Other discretionary spending, by demographics, December 2011
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- Figure 86: Least popular discretionary spending, by demographics, December 2011
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Appendix – Factors Affecting Household Finances
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- Figure 87: Financial events and concerns, by current financial situation, December 2011
- Figure 88: Financial events and concerns, by financial confidence, December 2011
- Figure 89: Impact of the economic slowdown, by demographics, December 2011
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- Figure 90: Users to experienced difficulty getting a mortgage/credit, by demographics, December 2011
- Figure 91: Users who experienced a substantial rise in home energy costs, by demographics, December 2011
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- Figure 92: Employers who imposed pay cuts/pay freeze, by demographics, December 2011
- Figure 93: Employers who have cut or plan to cut jobs, by demographics, December 2011
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- Figure 94: Users who spend more on the weekly shop, by demographics, December 2011
- Figure 95: Increased housing costs as an impact of the economic slowdown, by demographics, December 2011
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Appendix – Engagement in Personal Finance and Economic News
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- Figure 96: Consumer engagement in personal finance and economic news, by financial wellbeing segmentation, December 2011
- Figure 97: Consumer engagement in personal finance and economic news, by current financial situation, December 2011
- Figure 98: Consumer engagement in personal finance and economic news, by financial confidence, December 2011
- Figure 99: Consumer engagement in personal finance and economic news, by change in financial situation over the last year December 2011
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- Figure 100: Consumer engagement in economic news, by financial priorities, December 2011
- Figure 101: Consumer engagement in personal finance, by financial priorities, December 2011
- Figure 102: Consumer engagement in world news, by demographics, December 2011
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- Figure 103: Consumer engagement in the economy news, by demographics, December 2011
- Figure 104: Consumer engagement in politics news, by demographics, December 2011
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- Figure 105: Consumer engagement in sport news, by demographics, December 2011
- Figure 106: Consumer engagement in personal finance, by demographics, December 2011
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- Figure 107: Consumer engagement in business news, by demographics, December 2011
- Figure 108: Consumer engagement in environment news, by demographics, December 2011
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- Figure 109: Consumer engagement in culture news, by demographics, December 2011
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