AXA's quarterly report presents a snapshot of financial confidence, behaviour and attitudes as well as views on topical money issues among eight distinct demographic groups.
The 12 months to January 2012 saw consumers behave with persistent caution as the economy continued to decline. Just 16 per cent agree that they expect their financial situation to improve in the next three months, with even the more affluent groups seeing no bright side: 53 per cent of even the Successful Security group disagree that they will see an improvement to their financial situation.
Such is the feeling of pessimism that just over one in 10 (11 per cent) agreed that they could not see a time when their earnings will cover their outgoings, while seven per cent agreed that they actively avoid opening their bank statements or checking their balance online.
The result has been severe cutbacks in spending and saving over the previous 12 months, with restrictions especially noticeable in grocery and fuel consumption. The more affluent sections of the population are cutting back on spending in the most basic areas: just under three in 10 (29 per cent) of Successful Security and almost one in five (18 per cent) of Exclusive Lifestyles agreed that they are likely to or have already switched to a cheaper supermarket for their basic food shopping.
Similarly, just under a quarter (24 per cent) of Successful Security and more than one in 10 (13 per cent) of Exclusive Lifestyles say they have had to buy more own-label or value brands to 'make ends meet' over the past three months, while almost one in five (17 per cent) of the Successful Security group cut back use of oil, gas and electricity in the past three months.
However, in spite of the pessimism, Q4 saw emerging confidence in the Government's handling of the economy, rising by four points in the last quarter to 37 per cent.
Borrowing is still as necessary as ever
There was no change in the number of consumers borrowing on credit cards or loans in the last quarter, and for some groups it remained worse than for others: 21 per cent of The Stretched were still borrowing on overdrafts as a way of making ends meet, more than any other segment and 17 per cent of Nest Builders said that they had borrowed on credit cards and loans in order to make ends meet.
There was little change in the number of people able to pay off their debts, at just 12 per cent, with Under-funded Seniors the least likely to clear their loans.
Looking forward, as many as one in 10 (nine per cent, rising to 12 per cent among The Stretched and Under-funded Seniors) disagreed that they were confident that they could pay back their loans in the specified time period.
A staggering 34 per cent agreed that trying to satisfy their immediate financial needs means they are not saving anything for retirement and 18 per cent agreed that they are "relying on downsizing my home to give me retirement income". However, only four per cent of consumers either stopped or reduced payments into their pensions in order to make ends meet over the past three months.
Taking control
Encouragingly, the majority agreed that they keep a close eye on their finances: eight in 10 (83 per cent) agreed that they have a very clear picture of what they earn and what they pay out each month, and that they monitor this regularly.
Moreover, consumers appear keen to protect and make the most of the money they do have and have reported an increasing readiness to seek professional advice. One in four (26 per cent) say they would be happy to pay a financial adviser, a rising trend throughout 2011.
A clear pattern has emerged in the last four quarters of our Big Money Index research, showing that finances are more stretched than ever and seeing even the groups with more disposable income making basic cutbacks. Tighter purse strings are evident, with many restricting not only the nicer things in life, but also making changes to their food shopping and fuel consumption to a degree that paints a disheartening picture. However, we are encouraged by the fact that increasing numbers are at least trying to manage their finances more pro-actively and that more consumers appear to have a renewed confidence in the Government's handling of the economy. It will be interesting to see how this develops beyond the March Budget.
NHS: the end of free treatment?
The overview also saw consumers expressing dim views over the funding of the NHS and its future, with many expecting that an end to free treatment will be a benefit in the long run.
Almost half (45 per cent) disagree that the Government has a clear vision for the NHS and almost four in 10 (39 per cent) agreed the UK will not be able to continue to fund an NHS that is free at the point of treatment. A third (32 per cent, 40 per cent among Prosperous Later Years) also agreed that if people do not look after their health, they should be denied free treatment on the NHS.
Meanwhile, it seems that many may be viewing private healthcare as the NHS's saviour: more than half (57 per cent) also agreed that they expect more treatments will have to be privately funded in the future, with a remarkable 41 per cent agreeing that those who can afford private treatment should do so to free up NHS resources. Six in 10 also agreed that those who pay for private healthcare cover are taking the burden off the state, a view that is highest amongst 77 per cent of Exclusive Lifestyles), while 62 per cent agreed that they expect more people will need to use private medical insurance in the next five years.