Warc, 6 June 2014
LONDON: More UK consumers are feeling optimistic about the future, and many have eased their tight grip on household expenditure, according to a new report.
The latest Austerity Index from agency JWT polled 800 British consumers and tracked five key consumer metrics: standard of living, "surviving or thriving", efforts to restrict spending, difficulty in saving and coping in the future. A higher index score indicates a more severe impact.
The report noted that "strict coping behaviours remain ingrained in almost everyone, living standards have got slightly worse and feelings about austerity remain unchanged."
But there were some bright spots in the data.
The overall index had dropped 60 points, in large part due to a significant improvement in the "efforts to restrict spending" metric, which was down over 200 points - a sign that people were not keeping quite such a tight rein on their spending as before.
The flip side of that fact, however, was a high score on the "difficulty in saving" metric, which would suggest that money was being diverted from longer-term saving to more immediate consumption.
Consumer confidence was higher than a year ago, with significantly more people believing that the UK was recovering economically.
JWT cited "the return of little splurges" as evidence that consumers were fed up with constant budgeting and were looking to treat themselves occasionally – 69% had done so during the first quarter.
But three times as many respondents were monitoring their outlay carefully as were not, and when the "efforts to restrict spending" metric was broken down further, some enormous disparities were uncovered.
For example, some groups scored in the hundreds on this metric, notably the over-60s and high earners, while mid-lifers aged 40-59 years old registered over 500.
Similarly, when "coping in the future" was considered, the picture of overall optimism appeared rather different. On a scale from one (coping very well) to ten (not coping at all), half of respondents placed themselves between four and six.
JWT also noted that some respondents were starting to worry about a rise in interest rates. Were that to happen, it could have a devastating effect on household income and spending power as mortgage payments climb.
Data sourced from JWT; additional content by Warc staff