By Max Clarke
27 million Britons are planning to reduce their spend on food and retail products by £90, or 16% of their average spend, in April as government austerity measures and high inflation further restrain disposable income.
Shopping comparison site Kelkoo, who carried out the research, calculate the decline will equate to £2.35 billion of the country’s retail spending by the end of April alone. Overall, two thirds of people feel they will be financially worse off following these changes and 37% believe their current standard of living will decline.
When it comes to general cut backs, our research shows that consumers plan to spend less on non-essential items in the coming year. The majority of those reducing their spending (71%) pledge to cut back on eating out, buying clothes for themselves (69%), socialising (67%), holidays (55%) electronics and gadgets (53%) and house renovations (40%). However, more than half claim they will also cut back on essential spending such as food (55%), car fuel (47%) and household bills (30%).
Our research shows that people are planning drastic measures in direct response to ‘Austerity April’ with 14% planning to change jobs to earn more money, 11% considering emigration, 5% cutting back on their child’s education and 5% downsizing their homes in a desperate bid to reduce living costs and save cash. More than one in four will struggle to make ends meet and 3.3 million people will be forced to rack up debts to keep on top of their finances. Unfortunately, more than one in ten of those spending less will cut back on paying off existing debts and credit cards to absorb the extra tax bill.
“Austerity April is hitting consumers at a time when the cost of living has reached a record high, forcing people to take drastic measures to counteract the prospect of further reductions in disposable income”, said Chris Simpson, Marketing Director at Kelkoo.
“It is estimated that January’s VAT increase could cost UK households £520 a year and this month’s taxation and benefit changes will leave consumers a further £200 worse off. As a result of squeezed incomes, a recent report from the CBI shows that just 15% of retailers saw sales increase year-on-year in March, marginally higher than the 6% in February, which indicates that any changes that directly impact consumer spending power have a real knock on effect for retailers.”
In total, the Government is expected to implement 45 major changes this month, all of which will impact people’s disposable income. According to our research, 58% of people didn’t realise the full impact of these changes.