Consumers' financial wellbeing has plunged to new low
Alliance Trust Research Centre's latest Financial Reality Index shows that the financial well-being of UK households has hit its worst ever level during its 11 year study.
During the first half of 2008, household consumption continued to grow slightly, even though food and energy prices rose, debt levels increased and house price growth slowed. This continued spending created an even worse underlying financial reality for the UK consumer. However, the latest results show that the credit crunch has finally hit consumer spending, as high mortgage payments and council tax bills are over-stretching households whose real earnings which aren’t keeping track with inflation. This is leaving families feeling much poorer and they are cutting back on any non-essential spending.*
Head of Alliance Trust Research Centre Shona Dobbie said, “The credit crunch has now fully started to hit consumers and net wealth conditions are at a record low. As predicted last quarter, equity markets and property prices have continued to fall and, combined with high levels of consumer debt, this has caused the Financial Reality Index to fall to its lowest ever level.”
* Source AT internal
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