The week starts with two gloomy developments for consumers. The slow recovery means people are being forced to dip into savings and forego their summer holiday.
First, the Guardian reports that “recovery at risk as households forced to dip into savings”. Larry Elliot reports that:
“Household finances in Britain are deteriorating at their fastest rate since the depths of the recession in 2009 amid fresh evidence that consumers are struggling to cope with rising prices and curbs on wages…
“[The monthly Markit index] suggested that the boost to spending provided in May by hot weather and the royal wedding has proved short lived, with six times as many households (36%) reporting that their finances had worsened this month compared with those registering an improvement (6%).”
“The number of people forgoing a summer holiday this year is 2.7million higher than in 2008 – the summer immediately before the financial crisis hit…
“When the recession first hit, millions of Britons opted for cheaper holidays within the UK, giving rise to the term ‘staycation’. But the research, by ING Direct, found that domestic tourism was now likely to suffer most from people opting out of holidays altogether. The poll of 2,000 people found that 88 per cent of people who had opted out of holidays in the last three years were those who would normally holiday in the UK.”
The report went on to find that, “36 per cent of Britons were planning to pay for the holiday from savings, up from 30 per cent last year.” The gloom is most acute for low and middle income workers with the Resolution Foundation finding that their pay will “flatline” until 2015 but with inflation galloping ahead few will fail to notice the decline in living standards.
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