Consumers Cautious About Spending

• News
• Published: 03 Feb 2010 in Money and Mortgages

With Government stimulus schemes coming to an end, consumers became more cautious about spending in January, new research has shown.

During the month, only 32% thought it was a good time for a major purchase, like a house or a car, down from 35% in December, Nationwide has found.

The fall may be attributed to the removal of various Government stimulus schemes, such as the stamp duty holiday on properties costing up to £175,000 and the reduced rate of VAT. The car scrappage scheme will also end this month.

The group's spending index, which normally increases during January, suffered by 12 points with the decline in spending confidence.

Nationwide said consumers could also be using their money to repay their debts following the Christmas season.

Martin Gahbauer, Nationwide's chief economist, said: "Heavy discounting on the high street and Government driven initiatives, such as lower VAT, the car scrappage scheme and the stamp duty holiday, combined to keep the spending index buoyant throughout much of 2009.

"The removal of these initiatives may now be causing consumers to reconsider parting with their cash at a time of year when we would normally expect to see high levels of spending confidence."