Almost a third (32%) of adults are planning to cut household spending over the next year compared to 19% back in October according to a recent survey.
The survey of 1,993 adults also found that 30% are now making monthly savings, up from 22% in October , with 17% planning to reduce personal debt. Good news after recent reports of an increase in those turning to short term debt solutions such as payday loans.
A pessimistic outlook may have contributed to increased levels of savings with 23% of those surveyed expecting their household finances to deteriorate over the coming year. The poorest households and those in full time work are most likely to cut back with 38% expecting to curtail expenditure. In spite of this a quarter still hoped for a pay rise this year- rising to 32% of those in the high earner bracket.
The survey was conducted on behalf of the Resolution Foundation think tank by Ipsos Mori.
While increased saving and debt reduction is good news, lack of spending power coupled with stagnating income levels, also reported this week, could herald a difficult year for many and a poor outlook for the economy. Gavin Kelly, Chief Executive of the Resolution Foundation said:
"families that are already hard pressed are preparing for yet another very tough year ahead, with a big rise in the numbers planning to cut back spending as well as trying to save and reduce their debts.
"Given this gloomy backdrop it's a real worry that a new round of cuts to tax credits planned for April will further dampen the spending power of low to middle income families. The longer households cut back on spending, the longer it will be before we see real economic recovery."