New Year demand for savings, investment and borrowing products slumps - weak ISA sales season in prospect

UK consumers are dis-engaging from financial services products. This is the message from the New Year UK Financial Activity Barometer* carried out for financial research consultancy JGFR by GfK NOP*

Commented John Gilbert, Chief Executive of JGFR :

“The latest survey highlights the lack of trust and confidence consumers now have in many financial services products. The key ISA sales season is going to be tough. There is a danger that the slump in demand, together with rising cost pressures on businesses, in part resulting from the growing regulatory burden, will put jobs at risk in retail financial services in the coming year”

In the recently published New Year 2012 UK Financial Activity Bulletin** the report found just 65% of adults intend to save, invest, borrow or repay debt in the next 6 months, the lowest proportion in the survey’s 10-year history.

Demand for savings, life insurance / pensions and investment products is especially weak. Only 54% of consumers intend to save or invest, compared to 63% a year ago and a survey average of 66%. Low deposit and bond returns and high volatility of shares may now mean low inflows in future for providers.

Borrowing intentions are also at historic lows with 11% intending to borrow compared to 13% a year ago and a survey average of 19%. While fewer people expect to repay / pay down debt (21% of adults compared to 26% in December 2010) net debt repayment continues to be higher than average highlighting consumers desire to relieve the burden of indebtedness.

All JGFR Financial Activity Indices at or close to record lows

All the JGFR Financial Activity Indices fell on the quarter. The headline JGFR Activity Index dropped to a survey low of 85.5, down from 88.8 in September and 92.3 a year ago.

The JGFR Savings and Investment Activity Index also fell to a survey low of 86.3, down 6 points on the quarter and dropping from 98.2 a year ago.

A temporary pick up in borrowing intentions in the autumn FAB prevented the JGFR Borrowing Activity Index also hitting a survey low, although the index dropped 4 points on the quarter to 57.6, slightly higher than 55.0 in the New Year 2011 survey.

With borrowing in decline, the JGFR Debt Repayment Index is close to a survey low, down 4 points on the quarter and 10 points on the year to 73.5.

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*The Financial Activity Barometer is a quarterly survey of consumers’ savings, investment, borrowing and debt repayment commissioned by JGFR from GfK NOP. It has been running since March 2002 and sits on the same omnibus survey of 2,000 adults aged 16+, representative of the UK population, used to undertake the UK Consumer Confidence Barometer for The European Commission. As a result a more detailed view of the UK consumer is obtained with cross-analysis between the two surveys.

**The New Year 2012 UK Financial Activity Bulletin was published on January 12 and provides detail findings on the financial mood of the consumer.

Details: John Gilbert 0208 944 7510 /0 7740 027968