According to a survey released by market research firm Nielsen, almost half of the British people think that the country is in a recession.
More than half (55%) of these people think that this will last for another year or more, the same survey revealed.
Number of Britons adjusting spending habits at two-year high according to Nielsen
Additionally, it was discovered that the number of people who were altering their spending habits, in order to reduce their household expenses, had hit its highest level for two years. Nielsen revealed that out of the people surveyed, over half (53%) admitted to taking cost-cutting measures in the second quarter of 2017. This is the largest proportion since the second quarter of 2015 when 56% of Britons said that they had taken these measures.
This was a very different story to two months after the Brexit vote when Nielsen disclosed that household cost-cutting activity had hit 40%, its lowest level on record.
Steve Smith, managing director, Nielsen U.K. and Ireland, said: “A variety of factors has contributed to people tightening their purse strings.
“The pound’s weakness against both the dollar and the euro is finally feeding through to shop prices which mean real inflation is running at over 2.5%. In turn, this remains ahead of general wage growth and consequently, real household disposable income is being squeezed.”
The way people are reducing their expenses is changing
Nielsen also revealed that the way people are opting to cut their costs has also changed over the last couple of years.
Two years ago, Nielsen found that spending less on new clothes was the most popular tactic for Britons who were feeling the pinch. Now, 30% of Britons said that they are switching to cheaper grocery brands, closely followed by saving on gas and electricity bills (27%). Spending less on new clothes now comes in at third place, at 25%.
“Shopping behaviours are changing in a way that is reminiscent of the aftermath of the financial crisis in 2008/9,” continued Smith.
“Shoppers are well trained to use their household grocery budgets as a way to manage overall household costs, particularly as the desire to treat themselves remains. This is shown by the fact relatively fewer people are willing to sacrifice entertainment, holidays, and take away meals.”
Consumer confidence has fallen
Nielsen reported that British Consumer Confidence had fallen 7 points, from 106 in the last quarter of 2016, to 99 in the second quarter of 2017. Scores of under 100 indicate degrees of pessimism.
While the European average is 85, global confidence is now at 105, an increase of 3 points.
Nielsen’s study discovered that the UK was the second most confident country in Europe, just before the Brexit vote last June. Now, the UK has dropped to ninth position.