As a result of the ongoing credit crunch, UK households are cutting back on spending

During the last six months, household consumption continued to grow slightly, despite the rise in food and fuel costs, debt levels rose and house prices fell. In the same period wages have stagnated and reduced in real terms.

According to recent surveys consumer confidence continues to plummet as prices spiral and wages stagnate on top of the disaster occurring in the housing market. Fuel prices do seem to have stabilised a little at the pumps, offering slight relief to punch-drunk motorists reeling from multiple body blows. The hikes in car tax, which is allegedly targeted at the wealthy and their "Gas guzzlers" but is totally misguided and wide fo the mark, penalising many who can least afford it.

Food, domestic fuel prices and the general cost of living are rising almost by the hour! Interest rates remain high, whilst house prices are plunging into freefall. The lack of confidence has stopped all but the foolhardy or financially impervious from even considering a purchase, while vendors often get more desperate to relieve the pressure.

In view of the above, families are cutting back wherever possible on spending and attempting to keep their heads above water while being drageed down by the undercurrents and facing head-on into a financial tsunami. They are spending much less on non-essential items, but worryingly are also having to spend less on essential items.

You onluy have to take a lok at the "High street" for evidence of this. The myriad of "Sales" seem to be having less and less of an attraction and the "Sofa index" would point to a massive shrinkage of the soft furnishings market. This is used by many as an indicator of the comparative disposable wealth in our economy. People noticeably cut back on soft furnishings as soon as money gets tight.

The car industry are telling us how bad things are getting as prices spiral downward and sales plunge to all time lows. The building industry is in turmoil as thousand of builders, ground workers and related trades are laid off. Virtually all big building projects have been shelved due to the uncertainty facing our property market. Estate agents too are being laid off by the thousand as sales of properties slow to the lowest rate since the 1970's despite the huge demand.

So what can we as a nation do to stop the rot and turn the situation around? Out of all disastrous situations comes opportunity for achievement. We need to embrace the changes and challenges we are currently facing, digging deep to find that true "British spirit" and look at ways to lead the world out of this recessionary spiral we now find ourselves in.

Instead of playing lapdog to the US we should take a bold stance and have the courage of our convictions, standing up to be counted on the world stage. For years if you ever mentioned owning an electric vehicle you were either a milkman, insane or both! Now there are a diversity of hybrid and all electric vehicles on offer. All around the world governments are turning to sustainable energy sources. Green issues are no longer the domain of cranks and radicals, but election winners.

The world is changing and we need to decide whether we are prepared to take up the reins and lead that change, rather than being meekly lead like a lamb to the slaughter. We have the skills, the know-how, the entrepeneurial spirit, the acumen and the resource to become a world beating nation and drive the financial blues away. So come on Britain, let's be GREAT again!

We need to accept that things have to change, nay, we have to MAKE them change, in order to progress. If we work together for mutual benefit, this island nation of ours can make a huge impact on and difference to the global economic climate. For that chage to take place we have to start closer to home and get our own house in order. Buying you way out of debt whether and individual, company, organisation, government or nation simply does not work. This has been proven time and time again, but still we make the same mistakes.

If you are struggling to maintain payments to personal debts, take the bull by the horns and implement that change. If you need help, look no further. As a totally impartial and FREE charity, we aim to help as many people as possible to manage their debts and provide relief for the stress it causes. Just go to our site and you will find all you need to take your first steps towards financial freedom.

www.sterlingtrust.org.uk

As a result, this continued spending created an even worse underlying financial reality for the UK consumer but the latest survey shows that the credit crunch has finally hit consumer spending, as UK families are overstretched due to rising bills and whose wages are not in line with inflation.

Consequently, families feel much poorer and are cutting back and are only buying essential items.

Evidence of this came from the GfK NOP barometer of UK consumer confidence, who discovered that consumer confidence is at its lowest level since 1974 as soaring food and fuel prices sparks concern for the economy and personal finances.

The GfK NOP barometer of UK consumer confidence scored -39 in July, this represents the lowest level recorded since the survey commenced in 1974 and down from -34 in June.

The survey also found that nearly half of people said they had started buying supermarkets’ own brand of goods, while nearly a third have started shopping at discount supermarkets.

Furthermore, figures from the CBI revealed that sales on the High Street have slumped to their lowest level for a quarter of a century.

Alliance Trust Research Centre’s Financial Reality Index also established that as well as a record low in consumers’ household budgets, the second quarter of the year also brings a record low in net wealth conditions.

The steep decline in property prices and rising levels of debt have been a huge burden on household net wealth.

Commenting on the findings, Head of Alliance Trust Research Centre, Shona Dobbie, explained that the credit crunch has now fully started to hit consumers and net wealth conditions are at a record low.

As forecasted last quarter, equity markets and house prices have continued to decline, and together with high levels of consumer debt, this has caused the Financial Reality Index to fall to a record low, concluded Ms Dobbie.