55% expect less cash after Budget


Empty pocketMore than half of people believe this week's Budget will leave them with less cash in their wallets, with those in their middle years predicting they will be particularly badly squeezed, research has found.

Some 55% of people are forecasting that their spending power will be curbed after Chancellor George Osborne delivers his Budget on Wednesday, and just one in 16 (6%) of consumers expect to be better off, Lloyds TSB found.

Lloyds said its findings suggest that consumer spending is likely to remain weak in the coming months, placing pressure on the wider economy.

Three-fifths (61%) of 35 to 64-year-olds expect to be left worse off by the Budget, compared with just under half (46%) of people aged between 18 and 34.

Lloyds released its findings in its Spending Power report for February, which found that annual growth in spending on essentials increased to 2.6% in February, from 2.4% in January. The study said that consumers had the equivalent of £10 less a month to spend on non-essential items.

Food and drink was the biggest driver of the squeeze on budgets, as spending rose to its highest level in six months with a 3.8% year-on-year increase.

Gas and electricity spending showed a 3.6% annual increase and spending on car fuel was up by 0.8%.

However, there was some relief for households as debt payments recorded an annual decline of 1.3%, helping to ease some of the pressure on budgets.

Patrick Foley, chief economist at Lloyds TSB, said: "Consumers don't expect any relief from the Budget, and the recent fall in the exchange rate is likely to add to pressures.

"Consumer spending is therefore likely to remain weak through the first half of 2013 at least, keeping recovery in the wider economy far from assured."