How Britons are tightening their belts
Wednesday 16 April 2008
While many of us see an annual holiday as essential rather than a luxury, one in five people – or 12 million Britons – say they will cut back on a summer break. Young people aged 15 to 34 are more likely to go without a holiday. "The likelihood is that holidays will still be taken but inevitably in the form of cheaper options, or else shorter-duration breaks which match the household cash-flow," the report says.
DIY chains are suffering because householders considering big projects are no longer holding the "security blanket" of rising property values. Older people, in particular, are more cautious. On the upside, demand for low-cost cosmetic improvements may rise as people stay put.
The young, singles and families with young children are putting off saving to pay for every day living expenses. Saving is an easy target for cutbacks, having achieved a "nice if there's some spare cash" status, according to the report. One in 20 has cancelled plans to top up a pension.
One in 10 people have cancelled a trip to buy clothes. The worst-hit are those who buy most clothes – young single people and large families. Discount stores offering fast fashion as a "self reward" are likely to escape the worst of the crunch, while more expensive designer labels suffer in the credit slowdown.
New car registrations have been falling for years, partly because people are opting for second-hand, nearly-new models. Now, lower incomes and higher petrol prices mean fewer people are seeking finance for a new car. Eight per cent of the population have scrapped plans to buy a new main car.
New sofas, chairs, tables, beds, curtains and blinds have been put on the back-burner by families squeezed by rising bills. Nine per cent of people have scrapped plans to buy one of these items, making furniture and furnishings the sixth biggest area of cutbacks after holidays, DIY, savings, cars and clothing.
Cinemas, restaurants, pubs, bars and nightclubs have all suffered as people trim their discretionary spending. Although a limited amount can be saved by staying at home, 7 per cent of people have cancelled at least one night out. People may trade down, from the theatre to the cinema, or from fine to casual dining.
Another lesser casualty is the weekend spa or city break in Britain, or the short-haul trip to a European capital. Spring and autumn trips either side of a summer holiday may be sacrificed to ensure families can afford their main break. One in 20 of us – about 2.5 million people – have cancelled such plans. More may cancel if their credit card limits are cut.
Five per cent of people have postponed plans to buy a new computer, but IT is predicted to be one of the least affected areas of the economy because new purchases are often made to replace broken equipment. More susceptible, says the report, is the leisure electronics market. Many may have to give up their dream of owning a flat-screen plasma television.
Daytrips to the seaside or theme parks have suffered a little less than more expensive weekend breaks. "These are mainly impulse-driven expenditures, yet in the roster of day-to-day housekeeping priorities, they represent some of the more expendable areas of spend," the report warns.
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