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Consumers and The Economic Outlook - UK - February 2012

Mintel's Special Report Series are unique research findings that shed essential light on British attitudes, hopes, fears and desires.

By providing a comprehensive picture of the UK consumer, Mintel's special reports generally make newsworthy material for the national press, television and radio. Every report provides a thorough analysis of specialist sectors, breaking down often-complex sectors into easy to understand sections - analysed thoroughly to present the marketing opportunities and weaknesses.

Titles in this prestigious series include British Lifestyles, Sponsorship, Health & Fitness, Holidays and Consumer Shopping Habits.

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The economic environment
            • Economic growth continues to be fragile
              • Figure 1: GDP quarterly percentage change, Q1 2005-Q4 2011
            • Two plus years of squeezed household incomes continue
              • Figure 2: Monthly change in RPI and average weekly earnings, January 2008-December 2011
            • Consumers’ financial well-being
              • More than three fifths categorise their finances as OK or healthy...
                • Figure 3: Household financial situation, December 2011
              • …but three quarters say they’ve been affected by the slowdown
                • Figure 4: Impact of the slowdown, December 2011
              • Many experienced deterioration in personal finances over the past year
                • Figure 5: Change in financial situation over the last year, December 2011
              • Expectations and priorities for 2012
                • Financial confidence over the next year
                  • Figure 6: Financial confidence, December 2011
                • Macroeconomic expectations
                  • Figure 7: Macroeconomic expectations for the coming year, December 2011
                • Personal finance expectations
                  • Figure 8: Personal financial expectations for the coming year, December 2011
                • Financial priorities
                  • How consumer views are shaped
                    • Factors affecting household finances
                      • Engagement in personal finance and economic news
                        • Figure 9: Consumer engagement in personal finance and economic news, December 2011
                      • What we think
                      • Issues in the Market

                          • What are the biggest factors affecting consumer finances?
                            • Are consumers ready to open up their wallets in 2012?
                              • How closely do people monitor the effects of the slowdown?
                                • How influential is the media in shaping people’s expectations?
                                • Future Opportunities

                                  • The price of financial well-being is eternal vigilance
                                    • Preventing bias from clouding reality
                                    • Economic Environment

                                      • Key points
                                        • The eurozone crisis
                                          • GDP declines in Q4 2011
                                            • Figure 10: GDP quarterly percentage change, Q1 2005-Q4 2011
                                          • Household income squeeze set to continue into 2012
                                            • Figure 11: Monthly change in RPI and average weekly earnings, January 2008-December 2011
                                          • UK unemployment expected to tick up
                                            • Figure 12: UK unemployment rate, seasonally adjusted, January 2006-November 2011
                                          • House prices going nowhere
                                            • Figure 13: Quarterly change in the Halifax house price index, Q1 2006-Q4 2011
                                        • Consumer Spending and Saving

                                          • Key points
                                            • Savings ratio moves upward as consumers prepare for a difficult 2012
                                              • Figure 14: Quarterly changes in GDP* and the savings ratio, 1975-Q3 2011
                                            • Britons taking a responsible approach to consumer credit
                                              • Figure 15: Gross and net consumer credit, seasonally adjusted, 2001-11
                                            • Cost of consumer credit
                                              • Figure 16: Average quoted household consumer credit rates, Jan 2006-Jan 2012
                                            • Mortgage lending has flattened out
                                              • Figure 17: Gross and net secured lending, seasonally adjusted, December 2001-December 11
                                            • Low mortgage rates helping to support consumer spending
                                              • Figure 18: Average quoted household mortgage rates, Jan 2006-Jan 2012
                                            • Write-offs have fallen to pre-crisis levels…
                                              • Figure 19: Write-offs of loans made to individuals, March 2006-Sept 2011
                                            • …but rising unemployment could push levels back up
                                            • Consumer Sentiment

                                              • Key points
                                                • 2012 starts with a ‘January bounce’ in consumer confidence
                                                  • Figure 20: UK consumer confidence, January 1997-Sept 2011
                                                • Confidence levels likely to be volatile throughout the year…
                                                  • …but could end the year up
                                                  • Household Financial Situation

                                                    • Key points
                                                      • Over three fifths view their current financial situation as healthy or OK
                                                        • Figure 21: Household financial situation, December 2011
                                                      • Overall household financial situation improves marginally in 2011
                                                        • Figure 22: Household financial situation, December 2010-December 2011
                                                      • Whose finances are solid or better?
                                                        • Figure 23: Household financial situation, demographic overview, December 2011
                                                      • Who’s at risk?
                                                        • Figure 24: Household financial situation, demographic overview, December 2011
                                                      • The plight of the self-employed
                                                      • Impact of the Economic Slowdown

                                                        • Key points
                                                          • The slowdown has affected over three quarters of British consumers
                                                            • Figure 25: Impact of the slowdown, December 2011
                                                          • Signs that the impact of the recession is starting to fade?
                                                            • Figure 26: Impact of the slowdown, December 2010-December 2011
                                                          • People not necessarily assessing their situation throughout the year
                                                            • High earners and retirees proving to be the most resilient
                                                              • Figure 27: Impact of the slowdown, demographic overview, December 2011
                                                          • Change in Personal Finances

                                                            • Key points
                                                              • More than two fifths say their finances have deteriorated over past year
                                                                • Figure 28: Change in financial situation over the last year, December 2011
                                                              • Things have steadily worsened for consumers since the recession ended...
                                                                • Figure 29: Change in financial situation over the last year, December 2010 vs. December 2011
                                                              • ...but for a minority things have improved
                                                                • Figure 30: Change in financial situation over the last year, demographic overview, December 2011
                                                            • Financial Confidence

                                                              • Key points
                                                                • Most are concerned about their prospects but expect to be fine
                                                                  • Figure 31: Financial confidence, December 2011
                                                                • Financial confidence levels relatively stable going into 2012...
                                                                  • Figure 32: Financial confidence, December 2010-December 2011
                                                                • …but with plenty of potential for improvement
                                                                  • Who believes they’ll be just fine or better?
                                                                    • Figure 33: Financial confidence, demographic overview, December 2011
                                                                  • Who’s anxious about their prospects?
                                                                    • Figure 34: Financial confidence, demographic overview, December 2011
                                                                • Financial Wellbeing Segmentation

                                                                  • Key points
                                                                    • The concerned to the carefree
                                                                      • Figure 35: Financial wellbeing segmentation, December 2011
                                                                    • Cause for Concern
                                                                      • Under Control
                                                                        • Flourishing
                                                                            • Figure 36: Responses to select statements about financial wellbeing, by financial wellbeing segmentation, December 2011
                                                                          • Change in personal finances over the past year
                                                                            • Figure 37: Change in financial situation over the last year, by financial wellbeing segmentation, December 2011
                                                                        • Macroeconomic Expectations

                                                                          • Key points
                                                                            • Consumers bearish on 2012 economic prospects…
                                                                              • Figure 38: Macroeconomic expectations for the coming year, December 2011
                                                                            • …but spirits could be lifted by year’s end
                                                                              • Consumers tend to have a subjective view of the economy
                                                                                • Figure 39: Macroeconomic expectations for the coming year, by consumer segmentation, December 2011
                                                                              • Lifestage influential in shaping expectations
                                                                              • Personal Finance Expectations

                                                                                • Key points
                                                                                  • Squeeze on household finances expected to continue
                                                                                    • Figure 40: Personal financial expectations for the coming year, December 2011
                                                                                  • Expectations vary according to financial wellbeing
                                                                                    • Figure 41: Personal financial expectations for the coming year, by financial wellbeing segmentation, December 2011
                                                                                  • Retirees expect a decline in income and saving levels…
                                                                                    • …while 25-44-year-olds are reining in debt
                                                                                    • Financial Priorities

                                                                                      • Key points
                                                                                        • A cautious and financially engaged consumer
                                                                                          • Figure 42: Personal financial priorities over the next 12 months, December 2011
                                                                                        • For many saving is a luxury
                                                                                          • Figure 43: ‘Any important’ personal financial priorities over the next 12 months, by financial well-being segmentation, December 2011
                                                                                        • Demographic overview
                                                                                          • Figure 44: ‘Any important’ personal financial priorities over the next 12 months, by financial well-being segmentation, December 2011
                                                                                      • Discretionary Spending

                                                                                        • Key points
                                                                                          • Simple pleasures top the list of spending priorities
                                                                                            • Figure 45: Discretionary spending, December 2010 vs. December 2011
                                                                                          • Are consumers starting to tire of being thrifty?
                                                                                            • Discretionary spending and financial wellbeing
                                                                                              • Figure 46: Discretionary spending, by financial wellbeing segmentation, December 2011
                                                                                          • Factors Affecting Household Finances

                                                                                            • Key points
                                                                                              • Rising living costs by far the biggest issue affecting British adults
                                                                                                • Figure 47: Financial events and concerns, December 2011
                                                                                              • Redundancies and pay freezes less of an issue
                                                                                                • All affected but some consumer segments less impacted than others
                                                                                                  • Figure 48: Financial events and concerns, by financial wellbeing segmentation, December 2011
                                                                                              • Engagement in Personal Finance and Economic News

                                                                                                • Key points
                                                                                                  • Most consumers paying attention to what is going on in the economy
                                                                                                    • Figure 49: Consumer engagement in personal finance and economic news, December 2011
                                                                                                  • The influence of the media on personal finance expectations
                                                                                                    • Figure 50: Consumer engagement in personal finance and economic news, by personal finance expectations, December 2011
                                                                                                  • Minor variations in engagement by different segments of the population
                                                                                                    • Figure 51: Consumer engagement in personal finance and economic news, by financial well-being segmentation, December 2011
                                                                                                • Appendix – Household Financial Situation

                                                                                                    • Figure 52: Household financial situation, by demographics, December 2011
                                                                                                • Appendix – Impact of the Economic Slowdown

                                                                                                    • Figure 53: Impact of the economic downturn, by demographics, December 2011
                                                                                                • Appendix – Change in Personal Finances

                                                                                                    • Figure 54: Most popular state of personal finances compared to a year ago, by demographics, December 2011
                                                                                                    • Figure 55: Next most popular state of personal finances compared to a year ago, by demographics, December 2011
                                                                                                • Appendix – Financial Wellbeing Segmentation

                                                                                                    • Figure 56: Financial wellbeing segmentation, by demographics, December 2011
                                                                                                • Appendix – Macroeconomic Expectations

                                                                                                    • Figure 57: Macroeconomic expectations for the coming year, by financial confidence, December 2011
                                                                                                    • Figure 58: Macroeconomic expectations for the coming year, by change in financial situation over the last year, December 2011
                                                                                                    • Figure 59: Macroeconomic expectations for the coming year, by current household financial situation, December 2011
                                                                                                    • Figure 60: Consumer economic expectations by interest rates, by demographics, December 2011
                                                                                                    • Figure 61: Consumer economic expectations by house prices, by demographics, December 2011
                                                                                                    • Figure 62: Consumer economic expectations by unemployment, by demographics, December 2011
                                                                                                    • Figure 63: Consumer economic expectations by taxes, by demographics, December 2011
                                                                                                    • Figure 64: Consumer economic expectations by the UK’s economic growth, by demographics, December 2011
                                                                                                • Appendix – Personal Finance Expectations

                                                                                                    • Figure 65: Personal financial expectations for the coming year, by financial confidence, December 2011
                                                                                                    • Figure 66: Personal financial expectations for the coming year, by change in financial situation over the last year, December 2011
                                                                                                    • Figure 67: Personal financial expectations for the coming year, by current household financial situation, December 2011
                                                                                                    • Figure 68: Consumer economic expectations by household’s income, by demographics, December 2011
                                                                                                    • Figure 69: Consumer economic expectations by savings, by demographics, December 2011
                                                                                                    • Figure 70: Consumer economic expectations by debts, by demographics, December 2011
                                                                                                • Appendix – Financial Priorities

                                                                                                    • Figure 71: Personal financial priorities over the next 12 months, by consumer segmentation, December 2011
                                                                                                    • Figure 72: Personal financial priorities over the next 12 months, by financial confidence, December 2011
                                                                                                    • Figure 73: Importance given to the attitude ‘Making sure that I don’t fall behind on bills and other financial commitments’, by demographics, December 2011
                                                                                                    • Figure 74: Importance given to the attitude ‘Trying to add to my rainy day savings/emergency fund’, by demographics, December 2011
                                                                                                    • Figure 75: Importance given to the attitude ‘Saving for a particular reason (eg holiday, new house, new car, etc)’, by demographics, December 2011
                                                                                                    • Figure 76: Importance given to the attitude ‘Clearing non-mortgage debts (eg credit card, personal loans etc)’, by demographics, December 2011
                                                                                                    • Figure 77: Importance given to the attitude ‘Saving for the long-term – pension, retirement savings’, by demographics, December 2011
                                                                                                    • Figure 78: Importance given to the attitude ‘Spending money on enjoying myself and the occasional treat’, by demographics, December 2011
                                                                                                    • Figure 79: Importance given to the attitude ‘Overpaying my mortgage’, by demographics, December 2011
                                                                                                • Appendix – Discretionary Spending

                                                                                                    • Figure 80: Discretionary spending, by current financial situation, December 2011
                                                                                                    • Figure 81: Discretionary spending, by financial confidence, December 2011
                                                                                                    • Figure 82: Discretionary spending, by change in financial situation over the last year, December 2011
                                                                                                    • Figure 83: Most popular discretionary spending, by demographics, December 2011
                                                                                                    • Figure 84: Next most popular discretionary spending, by demographics, December 2011
                                                                                                    • Figure 85: Other discretionary spending, by demographics, December 2011
                                                                                                    • Figure 86: Least popular discretionary spending, by demographics, December 2011
                                                                                                • Appendix – Factors Affecting Household Finances

                                                                                                    • Figure 87: Financial events and concerns, by current financial situation, December 2011
                                                                                                    • Figure 88: Financial events and concerns, by financial confidence, December 2011
                                                                                                    • Figure 89: Impact of the economic slowdown, by demographics, December 2011
                                                                                                    • Figure 90: Users to experienced difficulty getting a mortgage/credit, by demographics, December 2011
                                                                                                    • Figure 91: Users who experienced a substantial rise in home energy costs, by demographics, December 2011
                                                                                                    • Figure 92: Employers who imposed pay cuts/pay freeze, by demographics, December 2011
                                                                                                    • Figure 93: Employers who have cut or plan to cut jobs, by demographics, December 2011
                                                                                                    • Figure 94: Users who spend more on the weekly shop, by demographics, December 2011
                                                                                                    • Figure 95: Increased housing costs as an impact of the economic slowdown, by demographics, December 2011
                                                                                                • Appendix – Engagement in Personal Finance and Economic News

                                                                                                    • Figure 96: Consumer engagement in personal finance and economic news, by financial wellbeing segmentation, December 2011
                                                                                                    • Figure 97: Consumer engagement in personal finance and economic news, by current financial situation, December 2011
                                                                                                    • Figure 98: Consumer engagement in personal finance and economic news, by financial confidence, December 2011
                                                                                                    • Figure 99: Consumer engagement in personal finance and economic news, by change in financial situation over the last year December 2011
                                                                                                    • Figure 100: Consumer engagement in economic news, by financial priorities, December 2011
                                                                                                    • Figure 101: Consumer engagement in personal finance, by financial priorities, December 2011
                                                                                                    • Figure 102: Consumer engagement in world news, by demographics, December 2011
                                                                                                    • Figure 103: Consumer engagement in the economy news, by demographics, December 2011
                                                                                                    • Figure 104: Consumer engagement in politics news, by demographics, December 2011
                                                                                                    • Figure 105: Consumer engagement in sport news, by demographics, December 2011
                                                                                                    • Figure 106: Consumer engagement in personal finance, by demographics, December 2011
                                                                                                    • Figure 107: Consumer engagement in business news, by demographics, December 2011
                                                                                                    • Figure 108: Consumer engagement in environment news, by demographics, December 2011
                                                                                                    • Figure 109: Consumer engagement in culture news, by demographics, December 2011

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                                                                                                Consumers and The Economic Outlook - UK - February 2012

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