Young consumers lead drive to cut spending in 2018

Young people are leading a drive by consumers to cut spending as prices rise faster than incomes, a survey by Lloyds Bank shows.

More than half of consumers have changed their spending habits since the start of 2018, according to the survey of more than 2,000 Lloyds customers.

Of the 54% who have changed their behaviour, 34% cut spending on clothes and personal care and 20% turned to voucher codes and discount websites. Reflecting the crisis in the casual dining market, 60% of consumers also said they had changed their eating and drinking out behaviour since the start of 2018.

Young people are tightening their belts more than those in middle age or older. The survey found 27% of 18-34 year olds reported increased use of discounts compared with 17% for those aged 35 and older. A third of younger people were eating in instead of going to restaurants compared with a quarter of consumers aged over 35.

The figures suggest tougher times could be ahead for the UK economy, which has relied heavily on consumer spending to maintain growth amid political and economic uncertainty over Brexit. Non-food sales fell in the three months to January as rising prices forced households to spend more on food and essentials.

The survey also adds to evidence that young people have been hit disproportionately by rising prices, stagnant wages and high property prices and rents.

Respondents aged 18-34 listed “making ends meet” and inflation in their top five concerns along with Brexit and the NHS. Those aged 35 or older said Brexit was their main concern and making ends meet and inflation were excluded from the top five.

Robin Bulloch, managing director of Lloyds Bank, said: “It is clear that many young people are concerned about the pressure on their finances in 2018 and are looking at ways to reduce their outgoings. 36% of 18-34 year olds are worried about making ends meet, so it is encouraging to see that our survey shows young people are making a real effort to watch what they spend.”

People aged 18-36 spend three times more of their income on housing than their grandparents, a survey by the Resolution Foundation showed in November. The foundation’s chairman, former cabinet minister David Willetts, said on 5 March that baby boomers’ wealth should be taxed to redistribute the burden between the generations.

According to Lord Willetts, such a measure would mean baby-boomers' children and grandchildren don't have to pay for these spiralling costs, helping to ensure a better future for generations to come. "The time has come when we boomers are going to have to reach into our own pockets. The alternative could be an extra 15p on the basic rate of tax, paid largely by our kids. Is that kind of tax really the legacy we – a generation who own half the nation’s wealth – want to bequeath our children and grandchildren?"

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