Survey: No Xmas cutbacks planned

12 November 2008 12:23am

Beleaguered retailers were given a boost after a survey revealed most people do not plan to cut back on Christmas spending this year.

The study by advisory firm Deloitte found 57% of respondents expected to match last year's spending, while 19% of respondents will increase their festive budgets. A quarter told interviewers they would cut their outgoings.

On average consumers said they planned to spend £655 on gifts, socialising and food and drink this festive season, a 7% drop from last year.

Deloitte said the figure, when compared to the 7% growth the year before, could be interpreted as a 14% drop in confidence. However, the study was carried out before last week's shock 1.5% interest rate cut.

Tarlok Teji, Deloitte's head of retail, said: "The rate cut should be a great boost to confidence but the key to it is that it needs to fit into pay packets because all consumers want is certainty."

Assuming this happens, he anticipated a broadly neutral Christmas with consumers focusing on family celebrations at home in a "return to traditional values".

He predicted bars and clubs would be worse off this year as people planned to spend an average of £126 on socialising, 12% less than 2007. The groceries sector was expected to gain as 66% of consumers said they would use supermarkets for some of their Christmas gift shopping, compared to 52% last year.

Mr Teji said the challenge for retailers - many of whom would have made their product orders before the financial crisis hit - would be to cater for the change in demand from customers looking to tighten their belts.

Around the country, people in the North East were most pessimistic about the economic outlook, as 82% rated the current situation as "bad" and 75% said they expect it to get worse in 2009. North West and Scottish consumers expected to make the biggest Christmas cutbacks and said they would spend 16% less than last year.

Londoners remained optimistic despite the shaky financial services sector and planned to splurge an extra 7% this year.

© The Press Association