Consumer: Families expecting to be squeezed harder in 2014

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Half of people expect their budgets to be squeezed even harder in 2014 than in 2013, consumer group Which? has found.

Despite some recent signs of improving consumer confidence amid better news about the economy, 49 per cent of more than 2,000 people surveyed in December predict their finances will come under increased pressure next year.

Less than one third of those asked expect their family’s financial situation to improve in 2014 - and after a string of price hike announcements by energy firms, three-fifths of consumers said they are already “dreading” the cost of their winter fuel bill.

The research also found that a quarter of people could only afford to pay for Christmas by borrowing. One third dipped into their savings, taking an average of £450 from their accounts.

Three quarters of those borrowing money put it towards presents, with four in ten borrowers also using credit to pay for food over Christmas.

Richard Lloyd, Which? executive director said: “Despite continuing signs of an improving economy, it seems families are still really feeling the squeeze, with millions of households pessimistic about their finances in 2014 after relying on savings or debt to fund Christmas spending.

“We want a New Year resolution from the Government to do more to help hard-pressed consumers in 2014 by getting a grip on the cost of essential bills and a resolution from firms to make sure they are giving customers the best possible value for money.”

The Which? research was published as a think-tank warned that politicians are ignoring a looming crisis in household debt which could see two million families driven to “the edge of their means”.

The Resolution Foundation said the number of British households spending more than half their disposable income on debt repayments could triple by 2018 if interest rates rise faster than predicted.

Matthew Whittaker, senior economist at the Resolution Foundation, said: “Even if we take a somewhat rosy view of how the economy will develop over the next few years the number of households severely exposed to debt looks as though it will double.

“This is an alarming prospect, where a large number of families find themselves struggling with heavy debt commitments.

“Even small increases in the cost of borrowing could push a significant number of families over the edge, and it’s most likely to happen to those with the lowest incomes - who are already spending the biggest share of their budget on repayments.”

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