Job loss fear cuts retail spending

In a six-month follow-up to its long-term national MoneyMood Survey, Legal & General (L&G) predicts continued turmoil for the economy as increasing fears of job losses impel the majority of workers to save rather than spend.

Less than a quarter of the population are now in the mood to spend (down 20% from 2005), nearly two-thirds in the mood to save and the remainder uncertain of their future plans.

Although seasonal factors also play a part in the mood to save, with one-fifth (21%) of the population now saving to pay off credit card debt in the aftermath of Christmas, the credit crunch and high-profile announcements of job losses around the country have clearly affected the mood of the nation, with nearly a third (29%) of all savers doing so in case they lose their jobs.

Perhaps more worrying for the longer-term is the fact that only 20% of savers are planning to contribute to their pensions, with short- term fears of job losses now outweighing the need for retirement planning.

Commenting on these findings, Adrian Boulding, Legal & General's Wealth Policy Director said, 'Investing for a rainy day has never been more important than now. We are encouraged to see our MoneyMood survey reflecting a more prudent attitude to credit card debt in these straightened times. But it's disturbing that amongst those that are saving, only 1 in 5 are providing for their old age in retirement, as this could have serious consequences in the decades ahead.

In our last national survey we cautioned against the ‘spend now pay later' culture, so are glad to see a more mature attitude to credit card debt, but we would urge people not to neglect their long-term needs in retirement just because of today's immediate concerns. For those seeking guidance, information or possible solutions to planning their financial future, visit our website at legalandgeneral.com or seek independent financial advice.'