Money worries result in millions slashing their spending
Research from comparison site MoneyExpert has revealed that households are slashing spending and dipping into their savings because money is so tight.
The report shows over 26.3 million adults are planning to cut their spending this year as fears about the credit squeeze hit home.
Sean Gardner of MoneyExpert said the credit squeeze is moving on from being something that just affects bankers to having real effects on real people in the real economy.
Many are set to cut their outgoings with 23% of those surveyed say they intend to reduce their food bill over the next 12 months. 31% will spend less on clothes, 32% will reduce expenditure on going out and entertainment, 12% will not buy a car as planned and 6% are cancelling plans to move house.
Furthermore, 20% said they will not have an overseas summer holiday this year while 16% will not have a summer holiday at all.
Many had hoped for continued rising in property prices but last week, the Nationwide announced a further fall in property prices. The price of the average home has fallen by almost £7,000 since October, according to the Nationwide.
There is worse to come, according to one expert, property prices could fall to as much as 30% over the next few years. Reports show that homeowners are also seeing the cost of their mortgage increase and are finding it more difficult to borrow money on credit cards or by taking out a loan.
Research shows that British consumers owe more than £1.3 trillion on loans, credit cards and overdrafts.