Table of Contents
Executive Summary
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- The state of the UK economy
- Sustained economic growth
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- Figure 1: Quarterly change in UK GDP, Q1 2009-Q4 2013
- Unemployment falls to a four and a half year low
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- Figure 2: Seasonally adjusted unemployment rate, Q1 2009-Q4 2013
- Household expenditure increasing as confidence slowly begins to return
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- Figure 3: Real household income and expenditure per head, Q1 2004-Q3 2013
- Consumers’ current financial situation
- Consumers’ finances are healthier overall
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- Figure 4: Household financial situation index, February 2009-November 2013
- Consumers’ finances are “less bad”, rather than fully recovered
- Spending priorities
- Staying on top of household bills is the main priority for consumers
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- Figure 5: Financial priorities for the next 12 months, November 2013
- Financial expectations
- Consumers are still pessimistic… but slightly less so than last year
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- Figure 6: Macroeconomic expectations for 2014, November 2013
- Most consumers expect their income to remain stable in 2014
- The majority of consumers don’t expect the feel-good factor to return in 2014
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- Figure 7: Return of the feel-good factor, November 2013
- What we think
Issues in the Market
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- Are consumers experiencing an economic recovery?
- Who’s benefiting from the UK’s growth and who isn’t?
- What impact have house prices had on consumers’ increased confidence?
- Which age groups are the most optimistic about their prospects in 2014?
Trend Application
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- Using the influence of family to improve long-term savings habits
- Extended brands can help consumers get back on track with spending
- Teaching financial responsibility can help financial brands to stay ahead
Economic Conditions and Outlook
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- Key points
- The UK economy is growing
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- Figure 8: Quarterly change in UK GDP, Q1 2009-Q4 2013
- Unemployment falls to four and half year low
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- Figure 9: Seasonally adjusted unemployment rate, Q1 2009-Q4 2013
- Youth unemployment remains persistently high
- Government debt continues to rise as a percentage of GDP
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- Figure 10: UK government debt as a percentage of GDP, January 2009-November 2013
Consumer Finances
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- Key points
- Household spending increasing as confidence slowly begins to return
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- Figure 11: Real household income and expenditure per head, Q1 2004-Q3 2013
- Consumer spending power is squeezed
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- Figure 12: Increases in the cost of living and the growth in average wages, January 2008-November 2013
- Savings ratio shows that consumers remain cautious
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- Figure 13: Household saving ratio, Q1 2008-Q3 2013
- Increased lending driving household expenditure higher
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- Figure 14: Total gross lending to individuals, credit card and non-credit card unsecured lending (excluding student loans), January 2009-November 2013
- UK government stimulates increased mortgage lending
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- Figure 15: Secured lending, total gross and changes in net, January 2009-November 2013
Consumers’ Current Financial Health
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- Key points
- More consumers report having money left at the end of the month
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- Figure 16: Current financial situation, 2011, 2012 and 2013
- The proportion of consumers who are doing okay has remained flat
- Consumer optimism will not automatically translate into consumer spending
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- Figure 17: Household financial situation index, February 2009-November 2013
- The squeezed middle-age groups
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- Figure 18: Consumers’ current financial health, by demographics, November 2013
- Retirees are more likely to be financially healthy
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- Figure 19: Current financial situation, by working status, socio-economic group and household income, November 2013
Changes in Financial Wellbeing
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- Key points
- Despite economic improvement, consumers still feel worse off overall...
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- Figure 20: Change in financial situation compared to how it was a year or so ago, November 2013
- …but consumers’ financial situation has improved compared to last year
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- Figure 21: Change in financial situation over the past year, January 2012-November 2013
- There has been little change in consumers’ finances over the past year
- The “sandwich generation”’ feeling the most financially worse off
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- Figure 22: Change in financial situation over the last year, by age and working status, November 2013
- Younger consumers feeling financially better off
- Consumers employed part-time are likely to feel financially worse off
- Women are feeling financial pressure more than men
- London is leading the UK’s economic recovery
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- Figure 23: Change in financial situation over the last year, by region and area, November 2013
- A third of Scottish consumers worse off than last year
Reasons for Improvement in Financial Wellbeing
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- Key points
- Higher wages are the tipping point for an economic recovery
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- Figure 24: Reasons for an improvement in financial position over the past year, November 2013
- Consumers feel better off with a financial safety net
- Job security is more likely to make young consumers feel better off
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- Figure 25: Reasons for improvement in financial situation, by age, November 2013
- Wealthier consumers are more likely to have experienced a rise in income
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- Figure 26: Reasons for improvement in financial situation, by annual income and housing, November 2013
- Renting has got more expensive, whilst mortgage repayments have remained low
Reasons for Worsening of Financial Circumstances
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- Key points
- Increasing household costs are the main reason for worsening finances
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- Figure 27: Reasons for a worsening of financial situation, November 2013
- Consumer feel worse off if they don’t have extra money for enjoyment
- Rising rents and mortgages are most problematic for 25-34-year-olds
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- Figure 28: Reasons for a worsening of financial situation, by age, November 2013
Financial Priorities
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- Key points
- For half of consumers, staying on top of bills is a top priority
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- Figure 29: Financial priorities for the next 12 months, November 2013
- Consumers would rather save before they spend
- Under-45s remain uninterested in saving for retirement
- Some priorities are more pressing than others
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- Figure 30: Financial Priorities, November 2013
- For consumers who want to buy a new home, it is a top priority
Challenges Affecting Household Finances
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- Key points
- Rising costs of goods and energy prices are affecting disposable income
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- Figure 31: Challenges affecting household finances, November 2013
- Consumers’ responses have been broadly consistent since 2011
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- Figure 32: Events that have affected your household finances, 2011-13
- Young families are most likely to have experienced difficulty getting a mortgage or credit
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- Figure 33: Challenges affecting household finances, by children and age, November 2013
- Consumers’ perception of the economic recovery varies greatly
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- Figure 34: Challenges affecting household finances, by demographics, November 2013
Macroeconomic Expectations for 2014
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- Key points
- Consumers are still pessimistic… but slightly less so than last year
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- Figure 35: Macroeconomic expectations for 2014, November 2013
- Consumers expect economic growth to be higher than last year
- Consumers expect energy bills to continue to rise in 2014
- Consumers are more optimistic than they were in 2012
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- Figure 36: Net expectation of changes in selected macroeconomic measures, 2011-13
- Older consumers are most confident that house prices will rise
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- Figure 37: Macroeconomic expectations for 2014, by age, November 2013
Personal Financial Expectations for 2014
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- Key points
- Consumers expecting their income to remain stable in 2014
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- Figure 38: Personal financial expectations for 2014, November 2013
- Consumers are still looking to lower debts and build up savings
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- Figure 39: Balance of personal financial expectations, December 2011, December 2012 and November 2013
- Younger consumers are more likely to expect to increase their savings
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- Figure 40: Personal finance expectations for 2014, by age and region, November 2013
- The economic recovery is being driven by London
The Return of the Feel-good Factor
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- Key points
- The majority of consumers predict that the feel-good factor won’t return in 2014
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- Figure 41: The expected return of the feel-good factor, December 2012 and November 2013
- …however, consumers are less pessimistic
- Young consumers are the most optimistic
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- Figure 42: The expected return of the feel-good factor, by gender and age group, November 2013
- Over-65s are also more optimistic
Appendix – Consumers’ Current Financial Health
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- Figure 43: Consumers’ current financial health, by demographics, November 2013
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Appendix – Changes in Financial Wellbeing
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- Figure 44: Change in financial situation over the last year, by demographics, November 2013
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Appendix – Reasons for Improvement in Financial Wellbeing
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- Figure 45: Most popular reasons for improvement in financial situation, by demographics, November 2013
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- Figure 46: Next most popular reasons for improvement in financial situation, by demographics, November 2013
- Figure 47: Other reasons for improvement in financial situation, by demographics, November 2013
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Appendix – Reason for Worsening of Financial Circumstances
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- Figure 48: Most popular reasons for a worsening of financial situation, by demographics, November 2013
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- Figure 49: Next most popular reasons for a worsening of financial situation, by demographics, November 2013
- Figure 50: Other reasons for a worsening of financial situation, by demographics, November 2013
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Appendix – Financial Priorities
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- Figure 51: Financial priorities – Making sure I don’t fall behind on regular bills, building up my emergency savings, saving for a specific reason and spending money on enjoying myself, by demographics, November 2013
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- Figure 52: Financial priorities – Paying off or reducing my non-mortgage debts, saving for retirement, overpay or repay my mortgage and buying a new home, by demographics, November 2013
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- Figure 53: Financial priorities – consolidating my debts, taking out credit and none of these, by demographics, November 2013
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- Figure 54: Financial priorities – Building up my emergency savings, by demographics, November 2013
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- Figure 55: Financial priorities – Saving for a specific reason, by demographics, November 2013
- Figure 56: Financial priorities – Saving for retirement, by demographics, November 2013
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- Figure 57: Financial priorities – Paying off or reducing my non-mortgage debts, by demographics, November 2013
- Figure 58: Financial priorities – Spending money on enjoying myself, or the occasional treat, by demographics, November 2013
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- Figure 59: Financial priorities – Making sure I don’t fall behind on regular bills and other financial commitments, by demographics, November 2013
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Appendix – Challenges Affecting Household Finances
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- Figure 60: Challenges affecting household finances – Been made redundant in the last 2 years, by demographics, November 2013
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- Figure 61: Challenges affecting household finances – Experienced difficulty getting a mortgage/credit, by demographics, November 2013
- Figure 62: Challenges affecting household finances – A substantial rise in home energy costs, by demographics, November 2013
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- Figure 63: Challenges affecting household finances – Employer has imposed pay cuts/pay freeze, by demographics, November 2013
- Figure 64: Challenges affecting household finances – Employer has cut or plans to cut jobs, by demographics, November 2013
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- Figure 65: Challenges affecting household finances – Have had to spend more on the weekly shop, by demographics, November 2013
- Figure 66: Challenges affecting household finances – Housing costs have increased, by demographics, November 2013
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Appendix – Macroeconomic Expectations for 2014
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- Figure 67: Economic expectations – Interest rates, by demographics, November 2013
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- Figure 68: Economic expectations – House prices, by demographics, November 2013
- Figure 69: Economic expectations – Unemployment, by demographics, November 2013
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- Figure 70: Economic expectations – Taxes, by demographics, November 2013
- Figure 71: Economic expectations – The UK’s economic growth, by demographics, November 2013
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- Figure 72: Economic expectations – Petrol prices, by demographics, November 2013
- Figure 73: Economic expectations – Energy bills, by demographics, November 2013
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Appendix – Personal Financial Expectations for 2014
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- Figure 74: Economic expectations – Your household income, by demographics, November 2013
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- Figure 75: Economic expectations – Your savings, by demographics, November 2013
- Figure 76: Economic expectations – Your debts, by demographics, November 2013
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Appendix – The Return of the Feel-good Factor
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- Figure 77: Expected return of the feel-good factor, by demographics, November 2013
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