Table of Contents
Issues in the Market
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- Abbreviations
Future Opportunities
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- A return to value?
- Taking the slog out of saving
Market in Brief
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- Most are getting by OK – but the strain is starting to show
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- Figure 1: Household financial situation, December 2008-December 2010
- The recession is over…
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- Figure 2: GDP quarterly percentage change, Q1 2004-Q4 2010
- …but more and more people are feeling the after-effects…
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- Figure 3: Impact of the slowdown, December 2008-December 2010
- …and confidence is ebbing away
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- Figure 4: Financial confidence, December 2008-December 2010
- The income squeeze is putting pressure on budgets
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- Figure 5: RPI and average weekly earnings, 2005-10
- Contrasting fortunes for those ‘at risk’, and those who are ‘rising above it all’
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- Figure 6: The slowdown segmentation, December 2010
- People are looking to build their emergency savings
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- Figure 7: Financial priorities, December 2010
- Bleak macroeconomic expectations for 2011
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- Figure 8: Macroeconomic expectations for the coming year, December 2010
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- Figure 9: Personal financial expectations for the coming year, December 2010
- Government cuts – chance of a rebound in confidence?
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- Figure 10: Impact of government austerity measures, November 2010
Key Issues
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- Are consumers feeling the benefit of the recovery?
- Do people fear the impact of spending cuts and tax increases?
- What are the spending priorities for 2011?
- How do consumer attitudes match up with macro-economic data?
Macroeconomic Conditions
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- Key points
- A shock fall in GDP…
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- Figure 11: GDP quarterly percentage change, Q1 2004-Q4 2010
- …and incomes are being squeezed
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- Figure 12: RPI and average weekly earnings, 2005-10
- Unemployment stabilises at just under 8%
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- Figure 13: UK unemployment rate, seasonally adjusted, Jan 2005-Sept 10
- House prices no longer defying economic gravity
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- Figure 14: Quarterly change in the Halifax house price index, 2005-10
- The implications of a becalmed property market
- Austerity measures will hit consumers
Consumers, Spending and Saving
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- Key points
- The credit economy
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- Figure 15: Quarterly changes in the savings ratio and GDP, 1970-2010
- Consumers keeping their credit cards in their wallets
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- Figure 16: Gross and net consumer credit, seasonally adjusted, March 2000-March 10
- The cost of borrowing
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- Figure 17: Average quoted household consumer credit rates, Jan 2005-Oct 10
- Mortgage lending still in the doldrums…
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- Figure 18: Gross and net secured lending, seasonally adjusted, March 2000-March10
- …even though costs have come down
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- Figure 19: Average quoted household mortgage rates, Jan 2005-Oct 10
- Write-offs rise, but remain manageable
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- Figure 20: Write-offs of loans made to individuals, March 2005-Sept10
Consumer Sentiment
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- Key points
- Confidence and the economy – moving in opposite directions?
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- Figure 21: GfK NOP Consumer Confidence Index, January 2005-January 2011
- Expectations trump reality
Household Financial Situation
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- Key points
- Despite the slowdown, most are getting by
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- Figure 22: Household financial situation, December 2010
- Is the real recession still on?
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- Figure 23: Household financial situation, December 2008-December 2010
- Whose finances are healthy?
- And whose already struggling?
Impact of the Slowdown
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- Key points
- Only a fifth have totally sidestepped the slowdown
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- Figure 24: Impact of the slowdown, December 2010
- The disconnect between GDP and personal experience
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- Figure 25: Impact of the slowdown, December 2008-December 2010
- Had people only been ‘playing’ at recession?
- And is the real consumer recession yet to come?
- Who has been hardest hit?
- And who has avoided the worst effects of the slowdown?
Financial Confidence
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- Key points
- A fifth are really worried about their future finances
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- Figure 26: Financial confidence, December 2010
- Further signs of faltering consumer confidence
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- Figure 27: Financial confidence, December 2008-December 2010
- The impact of uncertainty
- Who is confident about their future?
- And who fears the worst?
The Slowdown Segmentation
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- Key points
- Rising above it all? Or at risk?
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- Figure 28: The slowdown segmentation, December 2010
- The Squeezed Middle
- Rising Above it All
- At Risk
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- Figure 29: Financial wellbeing, by the slowdown segmentation, December 2010
- The Squeezed Middle – middle-aged...
- ...and middle earners
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- Figure 30: The slowdown segmentation, by key demographics, December 2010
Macroeconomic Expectations
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- Key points
- People are expecting a grim 2011
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- Figure 31: Macroeconomic expectations for the coming year, December 2010
- The bleak worldview of those ‘at risk’...
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- Figure 32: Macroeconomic expectations for the coming year, by the slowdown segmentation, December 2010
- ...and its impact on financial confidence
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- Figure 33: Macroeconomic expectations for the coming year, by financial confidence, December 2010
- Retirees fear tax rises: the middle age groups fear unemployment
Personal Financial Expectations
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- Key points
- Consolidating household finances – but not necessarily saving
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- Figure 34: Personal financial expectations for the coming year, December 2010
- Rising Above it All – and looking to stay that way
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- Figure 35: Personal financial expectations for the coming year, by the slowdown segmentation, December 2010
- For better or worse, few expect a turnaround in their financial situation
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- Figure 36: Personal financial expectations for the coming year, by most popular change in financial situation over the last year, December 2010
- Turning to credit to make ends meet
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- Figure 37: Personal financial expectations for the coming year, by household financial situation, December 2010
Post-recession Finances
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- Key points
- Two fifths are worse off since the recession ended
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- Figure 38: Change in financial situation over the last year, December 2010
- A further squeeze on the majority’s finances
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- Figure 39: Change in financial situation over the last year, by the slowdown segmentation, December 2010
- Few demographics have escaped unscathed
Impact of Government Cutbacks
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- Key points
- Three quarters expect to be hit by the fiscal squeeze
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- Figure 40: Impact of government austerity measures, November 2010
- We’re all in this together?
- Rising Above it All group expect to sidestep the worst of the cuts
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- Figure 41: Impact of spending cuts and tax increases, by the slowdown segmentation, December 2010
- How much is the fear of the cuts contributing to financial uncertainty?
- And does this give grounds for optimism?
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- Figure 42: Impact of spending cuts and tax increases, by financial confidence, December 2010
Financial Priorities
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- Key points
- Savings top the list of financial priorities
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- Figure 43: Financial priorities, December 2010
- Time for a bit of luxury?
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- Figure 44: Financial priorities, by the slowdown segmentation, December 2010
- Those in greatest danger are the least able to prepare
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- Figure 45: Financial priorities, by financial confidence, December 2010
- How did 2009’s intentions match up to reality?
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- Figure 46: Financial priorities over the previous year and coming year, November 2009
Discretionary Spending
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- Key points
- ‘Treating yourself’ is still top of the spending priorities
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- Figure 47: Discretionary spending, December 2010
- Capitalising on improving finances
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- Figure 48: Discretionary spending, by most popular change in financial situation over the last year, December 2010
- Come dine with us?
- When do essentials become luxuries, and luxuries become essentials?
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- Figure 49: Discretionary spending, by household financial situation, December 2010
- How important a motivator is financial insecurity?
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- Figure 50: Discretionary spending, by impact of the slowdown, December 2010
Factors Affecting Household Finances
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- Key points
- The slowdown gives – and the slowdown takes away
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- Figure 51: Financial events and concerns, December 2010
- The varying impact of the slowdown
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- Figure 52: Financial events and concerns, by household financial situation, December 2010
- Employment and financial confidence
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- Figure 53: Financial events and concerns, by financial confidence, December 2010
Appendix – Household Financial Situation
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- Figure 54: Household financial situation, by demographics, December 2010
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Appendix – Impact of the Slowdown
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- Figure 55: Impact of the slowdown, by demographics, December 2010
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Appendix – Financial Confidence
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- Figure 56: Financial confidence, by demographics, December 2010
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Appendix – The Slowdown Segmentation
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- Figure 57: The slowdown segmentation, by demographics, December 2010
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Appendix – Macroeconomic and Household Financial Expectations
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- Figure 58: Financial expectations for the coming year, by most popular change in financial situation over the last year, December 2010
- Figure 59: Financial expectations for the coming year, by next most popular change in financial situation over the last year, December 2010
- Figure 60: Financial expectations for the coming year, by household financial situation, December 2010
- Figure 61: Financial expectations for the coming year, by impact of the slowdown, December 2010
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- Figure 62: Financial expectations ‘lower’ for the coming year, by demographics, December 2010
- Figure 63: Financial expectations ‘lower’ for the coming year, by demographics, December 2010
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- Figure 64: Financial expectations ‘about the same’ for the coming year, by demographics, December 2010
- Figure 65: Financial expectations ‘about the same’ for the coming year, by demographics, December 2010
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- Figure 66: Financial expectations ‘higher’ for the coming year, by demographics, December 2010
- Figure 67: Financial expectations ‘higher’ for the coming year, by demographics, December 2010
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Appendix – Post-Recession Finances
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- Figure 68: Most popular change in financial situation over the last year, by demographics, December 2010
- Figure 69: Next most popular change in financial situation over the last year, by demographics, December 2010
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Appendix – Impact of Government Cutbacks
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- Figure 70: Impact of spending cuts and tax increases, by demographics, December 2010
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Appendix – Financial Priorities
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- Figure 71: Financial priorities, by most popular change in financial situation over the last year, December 2010
- Figure 72: Financial priorities, by household financial situation, December 2010
- Figure 73: Financial priorities, by impact of the slowdown, December 2010
- Figure 74: Financial priorities, by financial confidence, December 2010
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- Figure 75: Financial priorities over the last year, by demographics, December 2010
- Figure 76: Financial priorities over the coming year, by demographics, December 2010
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Appendix – Factors Affecting Household Finances
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- Figure 77: Most popular financial events and concerns, by demographics, December 2010
- Figure 78: Next most popular financial events and concerns, by demographics, December 2010.
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