Consumers are reigning in their spending in a bid to prevent themselves sliding into debt, Nationwide has suggested.
Commenting on BBC One’s Breakfast programme, Nationwide chief economist Fionnuala Earley said that the “lagged effect” of interest rate rises is causing consumers in the UK to rethink their financial attitudes.
“That’s what’s making them think about: ‘Hang on, I’m going to think forward now. I don’t think there are going to be so many jobs around in the future and I think interest rates are picking up on my spending decisions now. I’m going to rein in, pull back my belt and stop spending’,” Ms Earley told the programme.
She added that any stance such as this will be welcomed by those that are not debt free as it could “take pressure off the Bank of England”, meaning another interest rate rise could be avoided.
Research from the building society this week revealed that consumer confidence in the UK has fallen by two points, with the spending index just two points above the all-time low seen in December 2006.