Less people are looking to save, borrow or invest money, according to the publication of new figures.
According to GfK NOP's latest UK Financial Activity Bulletin (FAB) carried out for JGFR, an estimated 35.5 million Britons are expecting to do at least one of the above actions over the next six months, a fall from the 39.5 million recorded this time last year. Some 2.9 million fewer consumers intend to put money into a savings or investment scheme, with those planning to borrow via personal loans and credit cards falling by 1.8 million.
Commenting on the findings, John Gilbert, author of the report, said: "The latest Financial Activity Survey data reflects the straitjacket many consumers find themselves in. More people have adopted a cautious approach to personal finances - seemingly preferring to focus on meeting monthly commitments and spending out of income."
Mr Gilbert claimed that the study also reveals that financial services providers are set to introduce a series of "attractive offers" over the remainder of the summer months in an attempt to encourage consumer spending activity despite the impact of recent interest rate increases and "squeezed2 household budgets. "As in March the current climate remains a tough one for retail financial services providers. With higher-margin consumer credit constrained by continuing bad debt write-offs, many are having to seek new ways of generating revenue from financially restrained consumers - or cut costs," he added.
Figures from the firm also indicated that Britons are particularly pessimistic about lending money. The FAB Borrowing Index was reported to have remained unchanged from March's figures at 74.0 - a record low. Meanwhile, the Consumer Credit Index was shown to have slumped to 74.9 - the lowest figure ever recorded and the fifth consecutive quarter in which Britons' outlook on credit usage fell. Down from March's figure of 77.6, the index was also below the 101.1 witnessed in June 2006. The shortfall in demand for consumer credit was attributed to borrowers becoming more careful on how they spend their money amid concerns over future base rate rises by the Bank of England.
Despite fewer people borrowing via credit cards and personal loans in recent months, GfK NOP reported that the past two years have witnessed 'high levels' of consumers making repayments on various debts. In turn, the proportion of the adults expecting to complete debt repayments in the coming months has reduced from about a third to less than 25 per cent over the last 12 months. However, the decrease in debt servicing was partially attributed to more consumers taking a break from making secured loan repayments.
At the beginning of last month Alliance & Leicester's senior personal loans manager Richard Al-Dabbagh claimed that those who borrow money should do so with careful planning and thought. His comments come after research from the company showed that almost half (42 per cent) of car buyers choose an expensive forecourt finance deal as they find it a convenient option. Mr Al-Dabbagh reported that those funding a large purchase via store or credit cards may find a cheap personal loan to be a more competitive choice.
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