UK Consumers Aim to Trim Spending

The Daily Telegraph has released results of a TNS study into consumer spending intentions, following government announcements of public sector budget cuts and a rise in value-added tax (VAT) to 20% from January 2011.

Almost three-quarters (73%) of UK adults polled said they planned to curtail their spending as a precaution. At the start of 2010, 44% of consumers said they intended to tighten their belts.

Richard Hyman, chief retail adviser to the accountancy firm Deloitte, commented: “Since the Budget [in June 2010] reality has kicked in for many consumers. … If interest rates go up, alongside an increase in VAT in the new year, suddenly people will be feeling a lot less wealthy and they will spend less. This is going to make life awfully tough on the high street.”

The Telegraph reported that adults with children were even more worried about their immediate financial future, with 82% of respondents in this category saying they would buy less.

The Internet will play a vital role for consumers hoping to stretch their buying power. According to Fleishman-Hilliard and Harris Interactive, 30% of UK Web users polled in January 2010 said the Internet was “absolutely essential” or “extremely important” as an information source. No other source—including family, friends and colleagues—came close to this level of authority.

We can also expect to see more of the attitudes noted by the e-Dialog Center for Digital Marketing Excellence in Q1 2010. The Center asked UK and US Web users what information they most wanted to see in e-mail marketing messages. Top of the list were discounts on future purchases and advance notice of money-off sales.

For retailers in particular and advertisers generally, the message is clear: until confidence levels rise, most consumers in the UK will want to see value for every penny.