Food for thought as Britons cut back on spending

Britons usually love a bargain but it seems our spending on fashion and luxury foodstuffs is being hit as more than 36 million (76 per cent) of us prepare to settle in for a period of belt-tightening.

Research from Alliance & Leicester Current Accounts reveals almost 35 million Britons (73 per cent) have made some form of financial cutback recently and one third (34 per cent) expect their disposable income to decrease over the coming six months. For the majority, 79 per cent, this is due to the rising cost of food, consumer goods, household bills and fuel prices.

As a result, our passion for fashion is taking the first hit as 39 per cent of Britons say they are cutting back on their clothes shopping. Four in ten (39 per cent) of Britons are also reining in their general day-to-day living costs and 36 per cent are trimming their spending on socialising. Although 28 per cent of Britons admit putting a dent in their savings, less than one in ten (7 per cent) are decreasing their pension or retirement savings. However, a quarter (27 per cent) of Britons say they have not made any financial cutbacks recently.

Emma Walkley, Current Account Manager at Alliance & Leicester said: "It seems many of us are feeling the pinch and looking for ways to cut back. The good news is that people are taking action now and looking at ways of making their money go further rather than burying their heads in the sand.

"As a nation we are fairly financially minded which means that when budgets are stretched we can plan pragmatically how to cope."

Make do and mend?

Alliance & Leicester's research also indicates that with money worries increasing a culture of frugality appears to be having a renaissance. 45 per cent of Britons have started to shop around to get the best grocery deals, 39 per cent have started to make a concerted effort to switch off lights and other equipment to save on electricity costs, and 28 per cent have begun shopping in cheaper, ‘budget' supermarkets. But children and household help are feeling the pain too, as 3 per cent of Britons have cut their additional home help and 2 per cent have reduced their children's pocket money.

Pound stretchers

In fact, Britons are scrutinising their budgets carefully to see how they can improve the overall state of their finances - 20 per cent have switched utility providers, 12 per cent have sought out a 0 per cent credit card, and 8 per cent have switched current accounts.

Emma Walkley continued: "Our research shows that we are savvy money savers as well as savvy shoppers. Indeed, two fifths of Brits claim they budget carefully each month and live within their means, and just a quarter spend all their earnings or go into the red. However, with many stating that they expect their disposable incomes to reduce, people should be looking at ways in which they can make the most of their money, and that should include looking at getting the most from their current account. If you are earning meagre interest with one of the big-name banks, it is probably time to switch to a better deal."

People in Wales and the South West are most pessimistic (37 per cent) about their disposable income decreasing over the next six months. Those in Scotland and Northern Ireland (29 per cent) are the most optimistic

Married couples are significantly more pessimistic (38%) about their disposable income decreasing over the next six months compared to those in a relationship but living apart (22 per cent)

Londoners appear least affected by the credit crunch, with only 34 per cent blaming it for decreasing income levels compared to 48 per cent in Scotland and the Midlands

Londoners are also most likely (42 per cent) to be cutting down on their clothes spending compared to just 34 per cent in Scotland. However, Londoners are most likely (9 per cent) to be cutting back on their retirement saving, compared to 6 per cent in the Midlands

Those in the North and Yorkshire are the most frugal with 44 per cent saying they budget carefully each month whereas those in Scotland are most likely (26 per cent) to spend all their earnings or go into the red each month

Married couples (81 per cent) or cohabitees (70 per cent) are the best budgeters compared to singletons (66 per cent) or those in a relationship but not living together (62 per cent)

Alliance & Leicester offers a range of market leading current accounts, with competitive rates of interest and value added benefits. To find out more information on Alliance & Leicester's Premier current accounts, visit alliance-leicester.co.uk/currentaccounts.