Consumers and business fearful for the future

Almost half of all people across Wales are now finding it difficult to pay their bills, according to new research by Consumer Focus Wales. The fears come despite the UK having officially come out of recession in January, and will heap yet further pressure on the Government to reconsider its decision to increase VAT, described by Lib Dem MP for Brecon and Radnorshire, Roger Williams as a “very regressive tax that falls most heavily on the poorest in society”.

In its survey, of more than 1,000 people the consumer body also found that:

• 26% felt that their cash problems are likely to worsen over the next year, whilst 49% reported that they don’t save money.

• 84% blamed the economic decline for changes in how they spend their money, with 30% now spending less on items such as groceries.

• 72% reported being anxious about the rising cost of living, with 54% worried about paying their bills during the winter, the same number worried about petrol prices and 49% concerned at the rising cost of food.

Responding to the report’s findings, Lindsey Kearton, a debt expert with Consumer Focus Wales concluded:

“Following the recent Budget announcements pressures on household finances are likely to get worse.

“More worryingly, our findings show some of the most vulnerable, such as the unemployed and people with a long-term illness, are more likely to be cutting back on essentials such as groceries and energy use.

“While most people are trying to cut back on their spending, what we mustn’t do is overlook the disproportionate effects this could have on the health of the most vulnerable, who often live on very limited budgets.”

Meanwhile, just week’s after George Osborne called for a “private sector recovery”, the Bank of Scotland has reported that economic recovery in Scotland slowed during June, continuing to lag behind the UK as a whole. Commenting, the Bank’s Chief Economist, David MacRae, said:

“The recovery in the Scottish economy slowed in June. However, overall growth was achieved by a best-ever rise in manufacturing output augmenting only marginal growth in the service sector. While the pace of input cost inflation faced by businesses moderated, average costs again inflated at a much stronger pace than the UK. Recovery in the Scottish economy is underway albeit at a slower rate than the UK as a whole.”

In an editorial meanwhile, the Herald sought to use the figures to critique the ConDem’s policy and assumptions underlying its recent emergency budget, concluding:

“The private sector will save the day: that, stripped down, is the government’s hope when it comes to maintaining employment levels in the wake of severe budget cuts.

“The Treasury estimates that while up to 1.3 million jobs will be lost in the public sector and associated industries by 2015, the private sector will create 2.5m new ones.

“That rosy prediction has been greeted with scepticism by some economists and trade unionists, and looks shakier still in the light of news that Scottish small businesses are still struggling to obtain affordable credit.”