Recession prompts rise of financial rationality

The recession is prompting Brits to seriously rethink the state of their finances and their long-term financial futures, according to the Generation Recession Report from Friends Provident.

A new breed of realistic thinkers are emerging from the downturn, who have been prompted to get a grip on their day-to-day finances, as well as giving serious thought to their savings and pensions.

The Generation Recession Report, commissioned by Friends Provident and undertaken by social trend researchers the Social Issues Research Centre (SIRC), identifies that the recession may have come as a wake-up call for many as people recognise that their lifestyles cannot be maintained permanently without greater financial security.

Two thirds (68%) of the British public are still worried about the recession and experience negative thoughts and emotions in relation to it, such as the one in five (20%) who have been feeling more depressed about life in general since the start of the recession.

Yet despite the emotions involved, a significant number of Brits have taken these negative feelings and turned them around to motivate themselves by proactively addressing their finances:

One fifth (20%) of UK adults feel a greater need to look ahead and plan for the future as a result of the recession

A third (33%) of British adults have started saving more since the beginning of the recession

Of those UK adults who have a pension and make additional payments 30% have continued to do so
41% of Britons have spent less money on clothes

Almost a third (30%) of Britons are more careful how much money they spend.

Despite the high level of negative sentiment around the economy, more than a quarter (28%) of people are not significantly worried about the current downturn and just over half (51%) of those who have experienced a previous recession feel that this one is affecting them either less negatively or about the same as past recessions.

Dr Peter Marsh, author of the report at SIRC, highlights a new financial trend amongst young people: "A quarter of all people in the 26-30 age category felt that the fact they were in debt was unacceptable. This was the case for only 9% of people over the age of 55. What the data indicates, then, is that today's generation of ‘emerged' adults takes a rather more cautious approach to debt than that of their parents."

Simon Clamp, managing director UK at Friends Provident, said: "Despite the negative impact of the recession experienced by many people across the UK, it is encouraging that a significant number have taken it as an opportunity to become more financially savvy. Increasing financial awareness amongst consumers can only be a good thing and this is demonstrated by the numbers who are reducing their debts and becoming more focused on their futures and saving for the long-term.

"It is particularly encouraging to see the positive impact the recession has had on the way in which young people regard and deal with their finances. A long-term benefit of the recession may be a generation of younger people who have learnt important financial lessons."