ALMOST half of consumers said they significantly cut back on Christmas spending this year because of continuing fears over the economy.
More than a third were forced to dip into their savings and a quarter said they couldn’t have paid for Christmas without resorting to credit cards and overdrafts.
Meanwhile, rising energy bills and rising food costs and fears about job security show people fear household budgets are set to be even more tightly squeezed in 2013.
Research carried out by consumer association Which? found almost half of all people surveyed (46 per cent) said they had used credit cards, overdrafts, store cards or payday loans to cover the cost of Christmas spending.
Almost a quarter (22 per cent) said they would not be able to afford Christmas costs without using credit – while more than a third (36 per cent) said they had dipped into their savings. Those who borrowed money ran up debts of £301 on average, while people using savings to cover the cost of Christmas took out an average of £380.
Six out of ten people (61 per cent) said they felt Christmas was financially tougher than last year – but three quarters (75 per cent) said having less money would not stop them enjoying Christmas.
Almost half (48 per cent) said they had bought less festive food this year than last year – while 45 per cent said they had economised – buying cheaper brands this year because of rising prices.
More than nine out of ten people surveyed (92 per cent) said they thought people were under too much pressure to spend money over Christmas.
And more than half of those questioned (54 per cent) said they expected household budgets to be even more tightly squeezed in 2013.
Which? executive director, Richard Lloyd, said: “Most of us like to splash out on family and friends at this time of year so the news that millions of people have drastically cut back on Christmas spending, or taken out loans to cover Christmas costs, shows just how squeezed household budgets are right now. It also shows how far we are from a consumer spending-led economic recovery.”
Uncertainty about job security and the wider economy led to a marked fall in consumer confidence in December – while retailers reported lower takings as shoppers cut back on Christmas spending.
Howard Archer, chief economist of Global Insight, said: “Confidence was hit in December by a recent appreciable reversal of the improvement in consumers’ purchasing power seen over much of 2012.
“In particular, consumer price inflation was back up to 2.7 per cent in November after falling to a 34-month low in September.”