New Which? research paints a gloomy picture of consumers caught up in a long squeeze, that sees many unable to save, too worried to spend and unlikely to cope with financial shocks.
Which?’s latest Quarterly Consumer Report shows more than half (54%) of consumers expect their household budget to be tighter this year and 42% of people expect the economy to get worse in the next 12 months.
This is having a serious impact on financial resilience, as we’ve found four in 10 (41%) consumers already find it tough to cope with an unexpected expense.
Not saving for retirement – a ticking time bomb
We reveal a ticking time bomb of people who are not saving for their retirement, with half (50%) of people still not paying into a pension and more than a third (35%) saying they have no intention of doing so in the near future.
The top reason (41%) why people don’t have a pension is they can’t afford it, and the majority of people (58%) who aren’t retired don’t feel confident they’ll be able to live comfortably in retirement.
The findings show that far from topping up their savings or paying into a pension, many people are more likely to resort to using credit or dipping into their savings just to get by, with over a third (35%) increasing the total level of debt they have in the past month.
Action point: If you’re in a financial fix, we’ve got 10 ways to pay off your debt and balance your bank account.
Consumers struggling to pay for food and bills
Our research shows how much consumers up and down the country are struggling to pay for essentials as:
- almost 6 million households dipped into their savings to cover monthly household spending on items like food and utility bills
- 7 million cut spending on every day essentials like food, utility bills, housing costs and fuel
- 4 million households used credit to pay for food, with 44% of the population saying they are likely to cut spending on food in the next few months
Big squeeze has turned into the long squeeze
Which? executive director Richard Lloyd said: ‘Our research paints a gloomy picture of worried and pessimistic consumers, with a majority expecting their household budget to get even tighter than last year.
‘People have as little money to spend now as they had at the start of the recession four years ago, with many simply unable to prepare for unexpected costs or for their retirement.
‘There’s no doubt that the big squeeze has turned into a long squeeze. The assault on real incomes is unlikely to change for the better soon, with consequences not only for individual consumers but also for economic recovery.’