Credit crunch hits home as millions cut back

More than 26.3 million adults are planning to cut spending this year as worries about the credit crunch hit home in the real economy, new research from MoneyExpert.com shows.

Around 57 per cent of adults will cut back over the next 12 months with many planning to reduce spending on basics such as the weekly food shopping bill, the independent financial comparison website says.

The study shows 23 per cent of people intend to reduce their food spending while 31 per cent will spend less on clothes and 32 per cent will reduce expenditure on going out and entertainment.

More than one in five will not have an overseas summer holiday this year and another 16 per cent won’t have a summer holiday at all.

And 12 per cent will not buy a car as planned while six per cent will not move house as planned.

MoneyExpert.com is urging anyone who is struggling financially to get their borrowing under control and to commit to cutting debts.

Sean Gardner of MoneyExpert.com, said: “The credit crunch is moving on from being something that just affects bankers to having real effects on real people in the real economy.

“There is however a risk that we could talk ourselves into a recession by panicking unnecessarily. Certainly anyone who is struggling financially should be taking action but that has always been the case.

“There are still plenty of good deals out there and people with good credit records still have plenty of choice. There’s no need to panic.”