Two-fifths (40%) of consumers expect no improvement in their personal finances in 2024, research from AJ Bell has revealed.
According to the survey, which polled more than 2,000 adults, 74% have made lifestyle cutbacks this year in order to tackle inflation, rising interest rates and high mortgage costs.
The most common cutbacks included using less energy, cutting spending on personal goods, going out less and reducing supermarket spending.
In addition, 55% made adjustments to their work or finances, like using cash savings and generating additional income from working extra hours or online selling.
A further 22% expected to have to retire later because of inflation and higher interest rates.
Only one in five (21%) expected interest rates to fall by the end of 2024.
Laith Khalaf, head of investment analysis at AJ Bell, said: “Consumers aren’t banking on a miraculous boost to their personal finances in 2024, with four in 10 expecting no improvement from a pretty grim 2023, according to an AJ Bell and Opinium survey of 2,000 UK adults.
“Two years on from the first rate hike from the Bank of England, Brits are also digging in for the long haul on interest rates.
“While markets are getting very excited about the prospect of rate cuts in the coming year, consumers aren’t buying it, with only one in five expecting interest rates to have fallen by this time next year.
“They aren’t alone in this prognosis; the CBI has also said it thinks it will be 2026 before the Bank of England cuts rates. Clearly the longer monetary policy remains tight, the more pressure is piled on UK businesses and consumers.”
Khalaf added: “Our survey also highlights some of the changes people have made in 2023 to adapt to the cost-of-living crisis.
“Almost three quarters have made lifestyle cutbacks in response to higher inflation and interest rates. 40% have dialled down their gas and electric consumption, 27% have cut back on holidays, 25% have switched to a cheaper supermarket and 17% have cancelled subscriptions such as streaming or gym memberships.
“Clearly there’s a lot of belt-tightening and trading down going on, which has a knock-on effect on the UK economy.”
