Double-dip ‘increases money worries’

With the UK now officially back in recession, it may comes as no surprise that many consumers are even more concerned about the state of their personal finances.

After all, recession usually means job losses and shorter working hours, a lack of overtime and pay freezes. All these were notable features of the 2008-09 downturn and even if the latest economic shrinkage does not last as long as the previous one, the intervening time has hardly been a bowl of cherries when it comes to pay and prospects.

Surveying public attitudes to the situation, MoneySupermarket.com has found 37 per cent of consumers are more worried about their finances now the dreaded double-dip has finally arrived.

Furthermore, a fifth plan to try to make their money go further, while at the other end of the scale, just 16 per cent said return to recession would not affect them at all.

Head of banking at the website Kevin Mountford said: "It comes as no surprise that many Brits are nervous following the news that Britain has edged back into recession, the first double dip since 1970.

"This combined with the surprise rise in inflation in March will have also impacted UK households struggling to cope with rising costs of living and lack of pay increases."

Some Britons may find this makes it harder to pay off their existing debt, although the survey showed that very few people's decisions about whether or not to take on more borrowing have been affected by the recession, with only 1.8 per cent anticipating it will make them have more and 2.5 per cent expecting to seek less as a direct consequence.

The number planning to save more was up by 6.1 per cent, but 3.9 per cent said recession would prevent them putting more money away.

Consumers also listed their top ten financial fears, which included a number of areas where losing a job, getting into debt or being unable to deal with rising prices could have a major negative impact.

Inflation was the chief concern, with 43 per cent most worried about soaring utility bills, 34 per cent listing the rising cost of food as their main fear and 33 per cent primarily bothered about the cost when they fill their car up at the pumps.

But the list also includes the loss of a job (16 per cent) and being unable to pay off debts (11 per cent), while four per cent feared being unable to meet rent or mortgage payments.

The fears may be justified, as a study by Santander has revealed bills in particular have been increasing at a much faster rate than inflation.

Rather than being a recent phenomenon, the real-terms increase has been taking place over the last decade, during which time utility bills have soared by 71 per cent, compared with 38 per cent for Retail Price Index inflation and 24 per cent for incomes.

Santander's poll found 29 per cent of Britons said rising gas and electric bills have reduced their standards of living.

By James Francis