But we’re allocating more to managing the little money we may have.
Tax rises, greater spending and low interest rates have contributed to a record low household savings ratio of just 1.6% in Q1 2017, down from 3.3% in Q4 2016, and a high of 11.5% in 2010. At the same time, our debts are up – 1.4% on Q4 2016.1
However, to counteract this concerning trend, consumers are allocating more of their monthly budgets to managing the little money they may have, with the allocation on financial services doubling from 2% to 4% in the past two decades.
Today’s quarterly Consumer Spending figures2 show the amount Britons spent on goods and services increased by 0.4% in the first quarter of 2017 (after inflation). This is a slowdown on the previous quarter’s 0.7% increase, reflecting a tightening in the economy.
Commenting on today’s report, Alistair McQueen, Head of Savings & Retirement at Aviva said:
“Money is tight. We’re saving less than ever and making ends meet by borrowing more. This is a worrying sign for households across the UK.
“The silver lining amongst this is that Britons appear to be allocating more of their monthly budgets to managing their money, with the allocation on financial services doubling over the past twenty years.
“At a time of financial stress, the careful management of personal finances can make a real difference. It is the responsibility of the financial services sector to ensure people are getting a good return on their spend. Aviva is committed to rising to this challenge.”
Shifting spending habits
Looking beneath the headline figures, it is possible to identify how household spending habits have shifted since records began in 1997.
Reflecting changes in society, there has been a significant decline in the amount consumers spend on tobacco, postage and newspapers:
| Consumer spend on: | 1997 | 2017 |
| Tobacco (as a % of money allocated to alcohol, tobacco and narcotics) | 69% | 38% |
| Postal Services (as a % of money allocated to communication) | 26% | 4% |
| Newspapers (as a % of money allocated to recreation and culture) | 17% | 3% |
Spending more managing our money
Encouragingly, we are allocating more of our budgets managing the little money we may have.
| Consumer spend on: | 1997 | 2017 |
| Financial Services (as a % of money allocated to ‘miscellaneous’ items) | 19% | 33% |
| Financial Services (as a % of our total allocation) | 2% | 4% |
ENDS
Sources:
1https://www.ons.gov.uk/releases/ukquarterlysectoraccountsjantomar2017
Media Enquiries:
Fiona Whytock, Senior Media Relations Manager T: +44 (0)7800 692299 E: Fiona.whytock@aviva.com
Notes to Editors:
- Aviva provides life insurance, general insurance, health insurance and asset management to 33 million customers.
- In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.
- Aviva’s asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages over £340 billion in assets. Total group assets under management at Aviva group are £450 billion.
- Aviva helps people save for the future and manage the risks of everyday life; we paid out £34.4 billion in benefits and claims in 2016.
- By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
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