Survey: Dwindling incomes to go on bills, not consumer spending

DWINDLING disposable income looks set to be used to keep households afloat this year instead of the Government’s wish to see more people spending to drive the economy, a survey suggests.

Although increased DIRT tax on savings in Budget 2012 may have been intended to encourage spending, a survey of 1,000 people for the Irish League of Credit Unions (ILCU) shows any increased spending will go towards rising bills and other costs rather than non-essential items.

The survey will do little to restore confidence in the economy, as 83% of respondents believe this year will be more difficult financially than 2011, including half who think it will be much tougher.

While 75% of people have consistently said mortgage and rent were among their most important bills in a series of similar surveys since April, groceries and other shopping have replaced heating, energy and other utilities as the second priority of people’s five top bills.

The Government’s biggest tax measure in the budget last month was to increase the top rate of VAT, a move which will affect most people, according to the survey.

The next biggest negative impact was found to be the rising college fees charge, while 7% of those surveyed were most worried about rising public transport costs.

Other areas of the budget hitting people most will be cuts to a range of social welfare benefits such as fuel allowances (5% of respondents), child benefit rates for third and subsequent children (4%), and part-time jobseekers’ benefit (3%).

Survey participants also said they would feel the hit from changes to lone parents’ benefit, reductions in the back-to-school clothing and footwear allowance and a rise in some school transport fares.

With the effects of the budget, rising energy bills and other financial worries leaving almost one in three people worried about how they will manage, ILCU chief executive Kieron Brennan said those in difficulties should know they are not alone.

“Remember that if you are in financial difficulty to contact your bank or credit union at the earliest possible opportunity to discuss your situation,” he said.

The ILCU has set up a free app for smartphones — My BudgetBuddy — to help people keep track of their spending and make best use of their income.

The respondents were also asked where they do most of their grocery shopping, with Tesco emerging as the leader with 38%, followed by 20% who shop regularly at Dunnes Stores. They were ahead of discount supermarkets Aldi and Lidl (11% and 10% respectively), with SuperValu (8%), Superquinn (6%) and Marks & Spencer (1%) trailing.

Just 2% said they did most of their shopping in other supermarket chains, while equal numbers shop in the North and another 2% use a local shop.