Spending squeeze – one in ten can’t make ends meet

One in ten Britons does not have the money to meet their monthly outgoings, with London seeing the biggest squeeze in spending, according to a survey by Lloyds TSB.

After conducting a survey of 2000 Lloyds TSB customers, the part taxpayer-owned bank revealed that clients are reducing both their spending and saving as pessimism increases over the issues of inflation, employment prospects and the housing market.

Over a quarter of individuals questioned stated they are planning to reduce spending on essentials to make ends meet. As a result of year on year discretionary spending power suffering a fall for the third consecutive month, spending power growth is running around 2 per cent below the level of growth expected in a healthy economy.

A further blow to households’ spending power comes as it is revealed the headline rate of inflation reached 5.2 per cent in September – the highest rate for three years.

The inflation hike was driven by an increase in gas and electricity prices, rising 13 and 7.5 per cent respectively.

Lee Schofield, Broker Account Manager at Ashley Park Debt Solutions, commented on the findings. “Earlier this week, Ofgem announced that energy providers are making profit margins of £125 every year from every household, compared to £15 back in June,” he said.

“This points to more financial hardship ahead as bills continue to increase whilst income at best stays the same. This puts even more pressure on families to find the money for essentials such as mortgage or rental payments and everyday living costs.”

According to Jasin Patel, director of current accounts at Lloyd TSB, the significant squeeze has led to a “prevailing sense of negativity for several months”.

He added, “This is feeding into personal behaviour, with more consumers now less likely to spend on non essential items, and many dipping into their savings rather than saving any surplus cash.
“This will feed through to muted activity on our high streets.”

Analysis of customer data highlighted that incomes are now 1per cent lower on average than last year as they continued to fall in real terms in September when compared with the same period last year.

Lee Schofield continued: “Many people are left with credit card bills and loans that they can no longer afford and it is becoming necessary for them to restructure their unsecured finances through less traditional means such as a debt management plan or an IVA to put them back in control of their finances and help them to safeguard the family home by ensuring they have the money available to pay their mortgage.”

Source: www.debtmanagementtoday.co.uk
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