Consumer payment attitudes shifting in tough times
Faced with continuously high inflation and rising borrowing costs, three quarters of UK consumers are breaking even or overspending each month, Intrum Senior Economist Anna Zabrodzka-Averianov told delegates at Intrum’s second annual Outsourcing conference in London. This is leading to changing customer sentiment on whether or not it is acceptable to skip payments.
Presenting early figures from the European Consumer Payment Report (ECPR) – an annual survey of 20,000 European consumers – Zabrodzka-Averianov said one in four UK consumers are spending more than their monthly income. The average overspend is £191 – 17% of the average monthly income.
The poorest consumers are struggling the most and have low savings buffers,. The survey shows that 41% have less than one month of income put aside. For those on low incomes, this figure rises to 60%.Intrum Senior Economist Anna Zabrodzka-Averianov
Consumers tightening belts for Christmas
As a result, consumers say they are planning to cut back where possible, with more than 60% saying they will spend less in the holiday season, one in five expecting to take on additional debt and one in three saying they could increase their use of buy-now, pay-later payment options to cover their day-to-day expenses.
In the UK, the trend for missing bills is worse than the European average, with 33% failing to pay at least one bill over the last 12 months, compared with 28% across Europe. This is up from 26% in 2019.Intrum Senior Economist Anna Zabrodzka-Averianov
Zabrodzka-Averianov highlighted generation differences, with Generation Z far more likely to miss bills than older consumers. Financial literacy is also poor: six in then have poor understanding of financial concepts. This appears to have even more of an impact than income level when it comes to money management and consumer feelings about their finances.
Pessimism about the financial future
Ultimately, the pressure is still building and consumers are pessimistic about the future. “Less than half of respondents believe their financial situation is going to improve over the next 12 months, and 65% expect they will never get wealthy no matter how hard they work or try to save.”
With trust in policymakers low, Zabrodzka-Averianov pointed to worrying evidence that consumer attitudes are shifting in the face of hardship. Almost four in ten said they would feel less guilt about skipping a bill now than they did in the past.
Businesses need to focus on supporting consumers and building trust.Intrum Senior Economist Anna Zabrodzka-Averianov
