Consumers feel better off in 2012, and are more likely to be in a position to save

The general public’s perception of their personal financial situation improved in January 2012.

In December 2011, 24% of the British public felt in a better financial position than they were six months earlier - but in January 2012 this figure moved up to 29%. The confidence level of GB consumers is now the same as the international average of the 24 countries measured on the Ipsos Global Advisor survey. Having trailed the international average for a while, this move up to average should be welcomed by companies and the Government.

Unfortunately it is not all good news, as this improvement has not yet translated into optimism for the future.

A higher degree of anxiety about the future reflects the mood of a public already disappointed by one stalled recovery. When asked how they expected their personal financial situation to change over the next six months, only 22% of the GB public thought that they would be in a stronger position than they currently are. This places Britain 19th out of 24 countries measured, leaving it well below the international average of 36% who are expecting their finances to strengthen over the next six months.

You would expect that this anxiety about future prospects would mean that the public would be unlikely to tie-up money in less accessible long-term savings or investments, but likelihood to invest in the future (including retirement planning and saving for children) is currently at its highest level since August 2010.

The proportion of the public that feel ‘more confident’ about their ability to invest in the future compared to six months ago, has risen from 17% to 24% between December and January. This is extremely positive news when taken in the context of a recent report from insurance company Aviva* that suggests families still lack sufficient savings to tide themselves over should they find themselves in difficulty.

With January’s lower inflation figures taking the pressure off Britain’s ‘squeezed-middle’ families slightly, saving for the future is becoming a more realistic possibility once more.

All of this data suggests that the public’s propensity to invest and save for the future is more strongly related to their current financial situation than what they think may happen in the future. This is intuitive, as investing for the future is not a consideration if you are uncertain about how to pay next week’s bills.

As the public are becoming more receptive to the idea of investing for the long-term, now is the time for financial services companies, and the Government, to encourage consumers to save for their future.

* Aviva Family Finances report, January 2012