WHILE the Budget brought cheer to beer-drinkers and relief to drivers, consumer groups say it did not do enough to ease the squeeze on household budgets.
Campaigners say something should have been done about soaring energy bills and food prices – warning that many families are already at breaking-point.
Meanwhile, analysts warn that rising inflation and stagnant wages are already restricting consumer spending and will inevitably put further pressure on the economy.
Research carried out by uSwitch shows more than a third of people (35 per cent) fear the Budget will spark a triple dip recession.
Scots have the lowest level of confidence in the Chancellor, with 87 per cent saying he does not understand the concerns of ordinary people compared to 77 per cent nationwide.
Campaigners say fuel bills are now the biggest financial concern and that they are currently being swelled by “hidden taxes” – with £49 on a typical yearly gas bill and £59 on a typical electricity bill currently going to the government in “green” tax. Axing VAT on fuel bills would save around £60 a year.
Michael Ossei, personal finance expert at uSwitch.com, says: “Homebuyers and small businesses may be jumping for joy following this week’s Budget, but the squeezed middle has been left stuck in the mud. People did not expect much from the Budget but have received even less than they had hoped for. Taking 1p off a pint is not going to cut it for the millions of homes struggling to pay their essential bills every month.
“For many, the Government simply hasn’t done enough to help households cope with spiralling cost of living. What is somewhat depressing is that most consumers don’t feel a change in government would make any difference to their finances – leaving them feeling trapped in a financial cul-de-sac. But there are always things you can do to help improve your finances, no matter how small. ”
According to a post-Budget poll carried out by Which? a third of people now feel less confident about the prospects for the economy over the coming year, while nearly a third (28 per cent) say they feel less confident about their personal finances.
Research by the consumer organisation suggests households have reduced their spending by more than £3,000 a year since the beginning of the financial crisis and more than half (55 per cent) say they plan to cut back on their spending significantly in the year ahead.
Six out of ten households predict their finances would be tighter in 2013 than last year.
Which? executive director Richard Lloyd said: “While people welcome all the financial help they can get, the Budget has not only failed to increase consumer confidence but has left people feeling worried about both their own finances and the wider economy.
“The UK economy is already suffering from the devastating impact of a collapse in consumer confidence, with households reducing their spending by £220 billion since the financial crisis began. ”
Research by Moneysupermarket shows three-quarters of households have cut spending in the last 12 months, while more than a third (38 per cent) say they have cut back on necessities.
Clare Francis of Moneysupermarket said the benefits would be swallowed up by the increasing cost of living.
“Giving with one hand may be a positive, but taking away with the other through other tax increases and benefit cuts means that people are no better off. In fact, the cumulative effect of this and previous budget changes, combined with wage stagnation and rising living costs means millions are worse off and an increasing number of families are on the breadline, struggling to make ends meet every month.
“Our own research has shown that three-quarters of households have had to limit spending over the past 12 months, while one in ten miss meals to feed their children, while a fifth have not been paying essential bills in order to cope. More needs to be done to help families – the government needs work harder to tackle rising everyday costs, such as heating, food and fuel.”
RAC technical director David Bizley said the current squeeze on household spending meant the government had had no choice but to freeze petrol duty: “With so many people struggling to make ends meet and being forced to limit the use of their motor vehicle, the Government had little choice but to scrap the planned fuel duty increase to ease the financial burden on drivers.
“A further increase in duty would have had serious consequences for the economic recovery as fuel prices have a direct knock-on effect on consumer spending and business activity.”
Economist Howard Archer warned that the squeeze on household budgets was having and was likely to continue to have a constricting effect on the economy as a whole – making it likely that the current retail slump will continue.
Archer said: “The problem that retailers – and the economy in general – face is that consumers’ purchasing power has come under some renewed pressure from higher inflation and weak earnings growth.”
Consumer minister Jo Swinson said the government was aware of the pressure on household budgets: “People are struggling and these are difficult times. Household budgets are stretched. But the nation’s finances are facing difficulties.”