Consumer spending power falls in January

Weak economic growth in the UK has led to consumer spending power being reduced in January.

The latest Lloyds TSB Spending Power Report found there was a -1.4 per cent decline in real terms spending in the first month of 2013. This means households had around £13 less a month to spend on non-essential items.

It fits in with the recent pattern of relatively weak income growth and when coupled with a rise in the cost of living, demonstrates why so many Britons may be struggling to get by.

If unsecured lending gets out of hand, individuals should look to take action sooner rather than later in order to bring the situation under control. A debt management plan is one option open to anyone who has debts above £1,500 and owes money to more than one creditor.

As well as reducing a person's monthly repayment schedule, it should also suspend actions such as County Court Judgments.

Speaking about the findings, chief economist at Lloyds TSB Patrick Foley said it demonstrates how plenty of consumers are still under pressure when it comes to their finances.

"Essential spending growth has clearly been affected by the snow in January, but the picture of weak discretionary spending power remains in place at the start of 2013. Looking ahead, inflation is likely to remain high and is expected to pick up in the first half of the year, so what happens to income growth will continue to dictate the extent of the squeeze on households," he added.

The situation has been compounded for some by the fact 30 per cent of individuals went overboard on purchases and did not stick to the budget they drew up for Christmas, which means they are still suffering with a financial hangover. On top of this, 22 per cent of those who did not bother with a budget spent more than they did 12 months previously. Moving forward, people need to make sure they work on their money management skills.

By James Francis