Britons usually love a bargain but it seems our spending on fashion and luxury foodstuffs is being hit as more than 36 million (76%) of us prepare to settle in for a period of belt-tightening. Research from Alliance & Leicester Current Accounts reveals almost 35 million Britons (73%) have made some form of financial cutback recently and one third (34%) expect their disposable income to decrease over the coming six months. For the majority, 79%, this is due to the rising cost of food, consumer goods, household bills and fuel prices.

As a result, our passion for fashion is taking the first hit as 39% of Britons say they are cutting back on their clothes shopping. Four in ten (39%) of Britons are also reining in their general day-to-day living costs and 36% are trimming their spending on socialising. Although 28% of Britons admit putting a dent in their savings, less than one in ten (7%) are decreasing their pension or retirement savings. However, a quarter (27%) of Britons say they have not made any financial cutbacks recently.

Make do and mend?

Alliance & Leicester’s research also indicates that with money worries increasing a culture of frugality appears to be having a renaissance. 45% of Britons have started to shop around to get the best grocery deals, 39% have started to make a concerted effort to switch off lights and other equipment to save on electricity costs, and 28% have begun shopping in cheaper, ‘budget’ supermarkets. But children and household help are feeling the pain too, as 3% of Britons have cut their additional home help and 2% have reduced their children’s pocket money.

Pound stretchers

In fact, Britons are scrutinising their budgets carefully to see how they can improve the overall state of their finances – 20% have switched utility providers, 12% have sought out a 0% credit card, and 8% have switched current accounts.

Key regional findings

• People in Wales and the South West are most pessimistic (37%) about their disposable income decreasing over the next six months. Those in Scotland and Northern Ireland (29%) are the most optimistic
  
  
• Married couples are significantly more pessimistic (38%) about their disposable income decreasing over the next six months compared to those in a relationship but living apart (22%)
  
  
• Londoners appear least affected by the credit crunch, with only 34% blaming it for decreasing income levels compared to 48% in Scotland and the Midlands
  
  
• Londoners are also most likely (42%) to be cutting down on their clothes spending compared to just 34% in Scotland. However, Londoners are most likely (9%) to be cutting back on their retirement saving, compared to 6% in the Midlands
  
  
• Those in the North and Yorkshire are the most frugal with 44% saying they budget carefully each month whereas those in Scotland are most likely (26%) to spend all their earnings or go into the red each month
  
  
• Married couples (81%) or cohabitees (70%) are the best budgeters compared to singletons (66%) or those in a relationship but not living together (62%)
  
  
• The research was carried out online for Alliance & Leicester Current Accounts conducted by Opinium Research LLP between 2 and 6 May 2008 amongst 2,213 UK adults aged 18 and over. Results have been weighted to nationally representative criteria.