Austerity reaches the affluent

In a new report, AXA is claiming that austerity is now firmly gripping more affluent consumers, as a third of higher earners switch to cheaper supermarkets and dip into savings to make ends meet.

The insurer’s latest “Big Money Index”, which presents a snapshot of financial confidence and behaviour, found that in the six months to June 2012 “unrelenting financial gloom” left consumers pessimistic.

The period saw spending cuts across the board, with 28% of respondents cutting back on food spending and almost one in four forced to spend less on gas, oil and electricity.

Most striking was evidence that even wealthier groups continued switching to cheaper supermarkets for their basic food shopping (32% of Exclusive Lifestyle and 25% of Successful Security) and dipping into savings to make ends meet (31% of Exclusive Lifestyles admitted to this).

In addition, 13% of Exclusive Lifestyle respondents admitted that they are not opening bills until the final demand arrives.

Overall, 14% of respondents agreed that in Q2 they “could not survive without a large overdraft facility or credit card”, rising to 19% among The Stretched.

One in five respondents stopped putting money into savings and the relentless squeeze on household finances meant that 6% of Under-funded Seniors didn’t know how much debt they had on cards and loans, while 15% of Young Professionals and 11% of The Stretched avoided opening bank statements.

AXA UK’s marketing director, Cheryl Toner, comments: “A pattern of relentless economising has set in since our Big Money Index surveys began in early 2011.”

She adds: “Severe cutbacks are evident almost regardless of affluence levels.”

AXA classifications mentioned above are based on data from Experian, as follows:

The Stretched: 20s-30s, low income, with few financial assets.

Young Professionals: mid 20s and 30s, no children, average income, likely to be taking out a first mortgage, low disposable income.

Exclusive Lifestyles: mid 50s-60s, married with grown-up children, mortgage-free, high disposable income with considerable assets.

Successful Security: 40s-50s, married, above average income, many with second homes.

Under-funded Seniors: retired people living in sheltered accommodation, low income and no savings, so dependent on the state.

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Category: Insurance News