Were we already spending less on luxuries before the credit crunch?

Every week there seems to be some report or another stating how spending levels on luxuries such as holidays has plummeted since the onset of the global credit crunch, and indeed the financial situation and turmoil over the past year has made things very difficult for many households and has severely restricted spending levels, leading to a downturn in the economy. However, one recent report has suggested that families in the UK had already started spending less on things like holidays and clothes before the effects of the global credit crunch took full effect.

The level of spending on luxuries such as these fell in 2007 compared to 2006, according to the figures, and the biggest fall was seen in women’s underwear. In 2007 the largest portion of household income was spent on travelling costs, which averaged around £61.10 a week per household. Leisure activities, housing, and fuel also took up large chunks of the household income, according to the report.

Following the survey of six thousand households in the UK the Office for National Statistics has said that whilst spending on various items and products has certainly gone down over the past year there is evidence to show that spending levels in certain areas had already dipped in 2007 compared to 2006, even before the credit crunch came along. Whilst the average weekly household spend rose by about £10 overall between 2006 and 2007, the figures showed that there had been a drop in spending on holidays and spending on clothes.

The amount of money spent on package holidays over the course of 2007 was slightly lower than the figure for 2006, with an average forty pence per week less being spent on package deals last year. Spending on clothing over the course of last year fell significantly, taking spending levels on clothes to their lowest since 2001. The snapshot of family spending from the ONS also showed that families were on average spending slightly more on gambling than on entertainment such as the cinema, theatre, or museums.

Families have had a tough time over the course of this year, as rising costs have resulted in spending levels falling, and this in turn has resulted in the economic downturn that the nation is going through. Rising food costs, rocketing petrol prices, and soaring bills have all impacted on spending levels and habits by average households, and this has been further affected by the increased risk of unemployment for many families stemming from the slowing economy.

The data from the ONS report showed that the most thrifty age group was the elderly, with households headed by an elderly person spending less. The households headed by those aged between thirty and forty nine years tended to spend the most. Families in certain areas including London, the South East, the East, Northern Ireland, and the South West had spent more than the national average, according to the figures.

Tags: time, housing, Northern Ireland, luxury goods, fuel, credit crunch, Office for National Statistics, cinema