Christmas at risk as UK consumers spend beyond their means
More than a fifth of UK consumers (22 per cent) worry that they may have to skip a low-priority bill over the next 12 months
As the festive period draws near and families look to finalise their Christmas present shopping lists, spenders will find their purse strings are tighter than they have been in previous years. Where will they find the money to buy gifts? Will they choose to take additional credit, or will they cut back in other areas?
The Intrum European Consumer Payment Report sets the alarm bells ringing as it highlights how 75 per cent of UK consumers are seeking to cut daily expenses and 39 per cent plan to use up savings to pay for their day-to-day expenses and bills.
The cost-of-living crisis is making UK consumers worse off than they have been for years. High inflation and rising interest rates are making life difficult for many. More than six in 10 (62 per cent) say they have less spending money now, after paying for essential items and bills, than they did a year ago – much higher than the European average of 49 per cent. As interest rates are increasing, mortgage holders who are on variable rates or on fixed-rate deals nearing the end of their contract face a significant hike in monthly bills. But the rising cost of living affects almost everyone.
Consumer Duty processes are the next step on the line in the industry’s efforts to ensure customers have a positive experience of taking and using credit. The cost-of-living crisis means it is vital that customer impact is considered at all stages of the credit lifecycle – many people will be forced to miss bills through no fault of their own. Working with them to find a realistic way forward is crucial.says Risk and Compliance Director, Sam Reed
Intrum’s ECPR data highlight how struggling consumers increasingly believe it is acceptable to skip bill payments, with a third (33 per cent) saying they have skipped at least one bill payment in the past 12 months – the highest proportion since 2019. Almost half of them (46 per cent) say this is a regular occurrence, so will we see consumers look to miss December payments to release cash for Christmas?
As consumers in the UK become increasingly cash strapped, research shows that defaults are increasing. Though there are many reasons behind late payments – from not having money to simply forgetting to pay – data highlight a shift in social norms, with a growing acceptance around skipping bill payments.