uSwitch.com comments

Edited by the Insidemoneytalk editorial team Oct 27, 2008

on the figures released this morning by the Office of National Statistics (ONS) confirming the first quarter of declined growth

Ann Robinson, Director of Consumer Policy at uSwitch.com, comments on the figures released this morning by the Office of National Statistics (ONS) confirming the first quarter of declined growth: "More than a year after the Credit Crunch began and, today, the UK is one step closer to the inevitable recession.

This is the first time we have been in this situation for 16 years, bucking the trend of 64 consecutive quarters of growth.

"2008 has been one of the toughest years on record for UK consumers.

This year alone, disposable income dropped by 15% for the first time since 1997, and now represents just 28% of gross household income compared to 35% in 2007.

Unfortunately household bills have also gone up by 7.7%.

With unemployment figures creeping up to 1.72 million this year and likely to hit 2 million next year, it is understandable why consumers are panicking and reigning in their spending.

"At the moment it really does seem that every penny counts for consumers.

We have seen 8.3 million people cancel holiday plans alone - meanwhile 26 airlines have gone under already this year with 30 more casualties predicted.

At the same time 20 million people (43%) have either cut down or completely stopped taking regular trips to the pub - but the knock on effect has been that 910 pubs ceased trading in the first six months of 2008 alone.

In total, consumers have already saved ?2.7 billion by making these small cut backs.

"We have also seen almost half of Brits (42%) cancelling insurance or pension contributions in a bid to cut household expenditure and ease financial pressure.

This means that potentially just over 19 million people have reduced their financial security, or ditched it entirely, in a bid to claw back some cash.

"However, whilst consumers are trying to be sensible and reign in their finances, it means the decline in spending is also fanning the flames of the forthcoming recession Unfortunately, it's the only course of action consumers can take at the moment.

They have lost confidence in the economy, the housing market and the banking sector this year - and it is too soon to tell when this confidence will be restored." For more information visit www.uSwitch.com or call 0800 093 06 07.