Consumer Reaction to the Credit Crunch - UK - January 2009
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For the last half decade, consumers have been making the most of cheap and readily-available credit, underpinned by the confidence that soaring house prices bring to homeowners. And for the last half decade, if not longer, pundits have been pointing out that this situation simply wasn’t sustainable.
These pundits have been proved spectacularly right. The sub-prime crisis in the US turned into a worldwide credit crunch. In turn, the credit crunch is set to turn into a severe and prolonged downturn. In the final quarter of 2008, amid rising unemployment, repossessions and insolvencies, the UK officially entered recession, defined as two consecutive quarters of negative GDP growth.
As far as consumers are concerned, though, it is early days. Unemployment may be rising, but it is well below the levels reached during the last recession. Inflation has started to fall, and base rates have been slashed – meaning that many mortgage holders will actually be better off. Just how hard is the slowdown hitting the average UK consumer? Which market segments are struggling to make ends meet, and which segments are – so far – entirely untroubled by the slowdown?
This report draws on exclusively commissioned consumer research, including a series of online focus groups, to answer these questions. It examines just how consumer behaviour is changing: where they are cutting back on spending; whether the banking collapses have prompted them to switch accounts; the impact on their mortgage payments; and whether insecurity is prompting them to start paying down debts and build up ‘rainy day’ funds.
The consumer research is backed up by an in-depth examination of the macro-economic factors affecting the economy. The report also identifies where businesses can learn from the last recession, drawing on Mintel’s 1993 Out of Recession report and past economic trends.
Key issues covered in the report:
Background to the credit crunch, and the impact on the wider economy.
Consumers’ general financial well-being and economic confidence.
Changing financial priorities, and the return (or not) of fiscal prudence.
The impact of the crisis on bank confidence – whether or not people have switched accounts in favour of safer providers.
Trimming expenses – are people cutting back on the likes of medical or life insurance in order to make ends meet?
This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.
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