POLITICAL UNCERTAINTY AND CONSUMER RESPONSE – MINTEL REPORT
Commenting on the election result, Richard Perks, spokesman for Mintel said:
“There have been dire predictions of what a hung Parliament could mean for the UK’s economy. For consumers, though, abstract discussions about yield curves and deficits take second place to what this might mean for unemployment and mortgage rates.
Consumers are nervous. They can see there is economic pain ahead and after a binge last Christmas, Mintel expects them to start concentrating on their finances. A hung parliament will do little to change that apart from add to the level of uncertainty.
Nervous consumers are cautious consumers. They will be delaying big-ticket purchases and redoubling efforts to pay off debts and to increase savings.
Recent Mintel research already shows that people are already wary about the state of the economy. When asked about their main concerns, 62% said that they were worried about the state of the economy, and over half (53%) about their own financial situation – well ahead of the likes of crime (44%) or immigration (42%)*.
Mintel’s research on consumer attitudes towards various economic factors** confirms this. A third feel that interest rates will rise, half think that unemployment would be up, and two thirds think that taxes would be higher by the end of the year.
The natural reaction among consumers to uncertainty and economic worries is to concentrate on getting their finances in order. Mintel’s research shows that adding to their rainy day fund tops the list of consumer priorities, while lending data shows that people are now far more reluctant to take on new debt. It’s good news for people’s personal balance sheets and their long-term financial health, but not so great for firms reliant on big-ticket, discretionary purchases.
Mintel has long suggested that for many people, the recovery will feel more like a recession than the recession itself did. A hung Parliament may delay the spending cuts that all commentators feel are necessary, but many will feel that it is just delaying the inevitable. Mintel’s key trends for 2010 – resilience and re-evaluation – are going to be as relevant after the election as they were at the start of the year.”
* March 2010 – online sample of 1,000 adults
** November 2009 – online sample of 2,000 adults
*** Resilience and re-evaluation – Part of Mintel’s 2010 Consumer Trends, copy available on request from the press office. The impact of the past year has changed consumer lifestyles and attitudes, and Mintel forecasts that 2010 will see consumers re-evaluate their current situation. The past year has increasingly seen value become an important part of the new economy. Mintel has seen a surge in value initiatives, and even those seemingly unaffected by the recession have made cut backs to obvious status symbols out of respect. However, looking ahead, the meaning of value will run deeper – price matters in 2010.
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