Financial strains ‘reducing consumer activity’

UK adults are becoming increasingly less active in the financial markets, affected by the pressure from the recent credit crunch and a slow growth in disposal income, it has been suggested.

Financial research firm JGFR found in its 24th UK Financial Activity Bulletin that the proportion of “financially-engaged” adults dropped from 84 per cent to 67 per cent in the last two years.

This is the lowest proportion of adults expected to save, borrow or invest money since the survey started in 2002.

Regionally, Londoners seem more likely to need debt advice or IVA help in future, as the survey revealed they are more likely to borrow than anywhere else in the country.

However, they are also more likely to repay debt than elsewhere, with 29 per cent of those in the capital taking steps to become debt free, compared to 21 per cent overall.

Report author John Gilbert said that this survey confirms that retail financial services face a “very difficult operating outlook”.

“Borrowing intentions have been weak for some time but the concern for many providers in this survey is the fall in savings intentions which will add to retail funding pressures,” he added.

Commenting on UK retail sales data recently, Ian Kernohan, RLAM economist, predicted that the economy will feel “very soft” in 2008, “which in turn has implications for public finances, the labour market and company profits”.