Optimism low as economy struggles

With the economy officially back in recession, it may come as no surprise that many people feel gloomy about their financial prospects.

And a survey by Santander has underlines the extent to which this is so, with just one in three people (31 per cent) feeling positive about matters.

It revealed that recent rises in the cost of living are playing a major part in stifling the recovery, with the typical family having to shell out £666 on essential bills. With energy costs and the price of food and petrol among the rising expenses faced, consumers have been squeezed heavily.

Commenting on the situation, lead UK analyst of the Economist Intelligence Unit Neil Prothero said: "Large swathes of the population are currently experiencing stagnant wage growth and rising costs and the bad news for consumers is that the costs for basic necessities such as food and energy are going to continue to rise as they're influenced by global price pressures."

Such a situation may be made much worse for some, should they have run up credit card debts through paying bills at a time when there is no cash left in the current account. 

For people on such a situation, the interest payments might make the situation even harder to manage as these additional costs will raise the total outgoings even further. If all such consumers can do is pay the minimum amounts on the cards, the interest will go on piling up and the situation will get progressively worse – which is hardly a recipe for financial optimism.

Of course, getting into debt is something that people on a wide range of income levels can suffer, not just the poorest, so debt management is something many could benefit from.

According to the Finance and Leasing Association, the level of credit card and personal loan borrowing in April this year was nine per cent upon the same month in 2011.

By James Francis