Recession over but consumers remain cautious

By Elliot Wright, 26th January 2010

Figures released today show that Britain has finally emerged from the recession - but research reveals that shopping habits have fundamentally changed and careful spending is here to stay.

GDP grew by 0.1% in the last quarter of 2009 as the UK scraped out of the recession, but the economy plunged by 4.8% over the whole year and this has had a massive impact on spending habits.

Research by online payment firm Paypal shows the recession caused 58% of shoppers to become more conscious of price while 54% started bargain hunting more.

28% of consumers try not to buy luxury items and over one in ten now attempt to negotiate better prices with retailers before purchasing an item.

The recession also made shoppers start saving up before splashing out. Over one in six claimed to save up for the things they wanted to buy rather than using a credit card as they would have done before the downturn.

Over one in ten now attempt to negotiate better prices with retailers before purchasing an item.

Mark Hodson, Marketing Director of PayPal UK, said: "The downturn unsurprisingly had a major impact on people's spending habits and shoppers have become more considered in their purchases.

"Although we're now technically out of recession it's going to be some time before consumers start feeling better off and in the meantime we're likely to remain savvy shoppers."

Despite the 0.1% growth, experts remain pessimistic about the future of the UK economy. Jonathan Loynes of Capital Economics described the minimal growth as "a major blow to hopes that the economy had emerged decisively from recession."

"'With household incomes under pressure, credit in short supply and a major fiscal squeeze looming, the path to a full recovery is going to be a long and bumpy one," he added.

Claims Financial