Households battening down the hatches risks prolonging economic woe

A third of Britons are cutting back their spending, and more are anxious about their job security, according to new polling from independent think tank, Resolution Foundation. The poll is the second in a new quarterly tracker of household finances, carried out by respected polling firm Ipsos MORI.

The poll reveals rising anxiety about job security – only 1 in 3 (35%) of those in work now say they feel secure in their job, compared to 41% in July. The figure is even lower for those working part time, at 27%.

One third of adults (32%) have already cut back spending in the last year and 1 in 5 (19%) say they plan to cut further during the next 12 months. The poorest households are more likely to be in more debt than they were a year ago but are also least likely to say they will reduce their personal debt. 11% of the poorest households say they will reduce their debt in the next year, compared to over 21% of higher earners.

The research also finds that:

• 3 in 10 (30%) in low to middle income households are making monthly savings compared to nearly half (46%) of higher earners
• 15% of those polled now expect their own financial situation to get worse over the next 12 months compared to25% in July

The news comes just before latest UK GDP figures are revealed on Tuesday. With dismal unemployment figures and latest official statistics also showing dramatic falls in consumer spending and the proportion of overall household income that is saved rising again, the signs are that households are preparing themselves for the worst as they batten down the hatches financially.

Gavin Kelly, Chief Executive of the Resolution Foundation said:

‘All the signs point to households preparing themselves for the worst as far as their finances are concerned – they are already cutting back spending and planning to continue to do so, as many grow more anxious about their job security. The tension of course is that the less households are spending, the longer it will be before we see real economic recovery’.

Notes to editors

1. Polling of 2,003 British adults carried out face to face by Ipsos MORI during 7-13 October 2011. Data are weighted to the national profile
2. Low to middle income households are defined at those with incomes below the UK median – but excluding those with household incomes equivalent to the bottom 10% of working age households – and adjusted for household size. This equates to a gross household income of £12-30k for a couple with no children, £24-42k for a couple with 2 children and £30-48k for a couple with 3 children. Poorest households are defined as those below these income brackets, and higher earners above. Polling figures by household income exclude those who declined to state an income.
3. The Resolution Foundation is an independent think tank working to improve the lives of people on low to middle incomes. This includes 11 million adults in 6 million households in the UK www.resolutionfoundation.org