By Lea Pachta
An astonishing 52 per cent of Brits plan to cut back on their spending habits this year compared to just four per cent who vow to spend more money, a study by accountancy software company Accountz has revealed.
The research found that whilst 61 per cent of consumers feel that the recent VAT increase is fair, almost half believe that they will notice an obvious change in retail pricing in 2010 and will cut down on spending accordingly.
An overwhelming 41 per cent of respondents consider it fair that retailers continue to absorb the 2.5 per cent VAT increase, whereas just 29 per cent think that retailers are suffering enough and shouldn’t have to shoulder the burden.
The areas where consumers believe raised prices will be most evident included grocery shopping (61 per cent), holidays and hotels (50 per cent) and restaurants and bars (39 per cent). Surprisingly, most respondents expect to see considerably less impact on larger ticket items, such as technology products (30 per cent) and furniture shopping (25 per cent).
However, when it comes to taking control of our finances, budgeting and forecasting for the months ahead, Brits are notoriously disorganised. The survey revealed that just six per cent of respondents use financial software packages, seven per cent use a spreadsheet system and a shocking 87 per cent manage their finances by simply checking their bank balance sporadically or on a regular basis.
“This survey highlights the financial insecurity that is rife amongst Brits at this current moment in time. As much as we would like to support our retail industry and purchase items as frivolously as we once did, we are clearly evolving and becoming more savvy with our finances, even though we rarely budget and forecast as we probably should,” commented Quentin Pain, founder of Accountz.
“The VAT increase is a major bone of contention for both retailers and consumers. Whilst it was inevitable, it is quite likely that it will impact heavily on consumer spending at a time when the high street is already in disarray and customers are staying away. It looks like 2010 could be quite a challenging year all round,” he concluded.