Which warns of shaky consumer confidence

While the Office For Budgetary Responsibility and other economists are projecting consumer spending will grow, based on higher than anticipated retail spending in the last quarter, new Which? research shows that consumer confidence remains low.

By December 2011, consumer confidence fell to -33 points, down 12 points on December 2010 and at its lowest since the 2008/9 recession.

Research released by Which? further highlights just how low consumer confidence, particularly to spend ‘as usual', has fallen:

• Most people (55%) feel their household is worse off than 2007. This is higher for low to middle income earners (66%), and those aged 35-64 (63%).
• More women (60%) feel they are worse off now than in 2007 than men (50%).
• Four in ten (39%) report a decline in their household income since 2007. This includes being forced to change to a lower paid job or work fewer hours (21%), retired (15%) and someone in the household losing their main job (15%).
• The consumers most likely to be finding things difficult now are low to middle income earners (57%) those aged 45-54 (47%), and women (42% vs 31% of men).

Worry is the most common feeling that people have about their immediate future, with three in ten saying that they're anxious about the next year. Consumers were found to be particularly worried about the prices of everyday essentials like energy (91%), fuel (91%) and food (87%).

Recent research from Which? also found that:

• One in four people (26%) have been forced to use their savings to buy food or other daily essentials, and one in five people (19%) have gone into debt to do this.
• Less than half of people (43%) say they're coping in their current income.
• One in three people (36%) are finding life difficult, more than double that of 2006 (16%).

This reduced consumer confidence is already having an impact on people's behaviour, with nearly one in three people (29%) giving up their annual holiday, and four in ten people (38%) spending more time socialising at home.

Over a third of shoppers (37%) are now going online to compare prices and save money, while three in 10 (29%) go to second hand shops to search out bargains.

For others the impact is less concrete - increased job insecurity or less willingness to spend - but just as real.

Which? executive director, Richard Lloyd said: "The Chancellor must not forget consumers in the Budget if his plans to help small businesses grow are to succeed. Growth assumptions based on people using their savings and getting into debt to buy daily essentials are short-sighted and flawed.

"We need a Budget that will put money back in people's pockets, helping households to cope with rising fuel, energy, mortgage and food costs.

“That's what will really boost consumer confidence and spending power, which is essential for getting sustainable growth going in the real economy."