Many consumers in the UK have had a very difficult financial year over the past twelve months for a number of reasons. Whilst interest rates have now dropped to 3% after some drastic cuts by the Bank of England many have spent the past year trying to cope with high repayments, which has left them struggling to make ends meet. In addition to this inflation levels have soared to record highs, which has also affected consumer finances. The cost of food has rocketed, petrol prices have soared, and energy bills have gone through the roof, which means that all in all it has been a very bleak year for most people financially.

With this in mind many may be planning to cut back on the cost of Christmas this year, and officials have pondered over just how Christmas spending levels are likely to be affected by the financial situation, and one business advisory group, Deloitte, has carried out a study in order to try and determine how consumer spending will be affected over the festive season with some surprising and sometimes worrying results.

Overall, it is thought that consumer spending will be down by 7% this Christmas compared to last year, taking into account spending on things such as gifts, clothes, entertainment, socialising, and other related purchases and activities. This means that retailers could be facing a very tough time, and many have already started slashing the cost of products in the hope of enticing consumers and tempting them into spending more money on the High Street.

However, in a breakdown the survey results showed that whilst 24% of respondents said that they would be cutting back on their spending this Christmas, around 54% said that they would be spending the same amount as they did last year despite a more difficult year financially. A further 24% said that they were actually planning to spend more this Christmas than they did last year. It is thought that the average spend per adult this year will be around £655 and this includes gifts, clothes, socialising, and entertainment.

The biggest cutbacks on Christmas spending appear to be in the area of socialising and going out, where it is thought that 12% less may be spent this year compared to last. 56% of consumers are looking to buy their gifts from supermarkets in order to try and cut back on costs.

There is hope that the latest 1.5% interest rate cut could help to boost consumer spending, but one Deloitte official said: “I think the main headline is this is worst Christmas for a generation. But as a nation we’ll be spending £36bn so it’s not a total disaster. Broadly speaking, we believe sales will be flat this Christmas, with a slight fall possible.”

One worrying part of the survey results showed that around 49% of consumers aged between sixteen and twenty four planned to have a good time over the Christmas period and worry about how to pay later on.

Another official said: “This age group has grown up in an affluent society with technology products and designer wear, are comfortable with debt, and have never been in a recession. Their high propensity to spend represents an opportunity for those retailers targeting younger customers.”

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