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Rise in UK Financial Activity
The final months of 2003 offer promise for Financial services providers, according to the latest Financial Activity Bulletin from Martin Hamblin GfK and John Gilbert Associates. Most categories of saving and investment have strengthened since June and returned to the levels of September 2002.
Sixty seven percent of adults expect to save or invest in the next six months, up from 65% in June: a further 13% intend to borrow or pay back debt. Many of the one in five of the population who are inactive are over 65 and live in low- income households.
The rise in the stock market has greatly improved the investment climate. 52% of households are now saving, vs 49% in September 2002. Forty-eight percent of people now believe it a good time to save, against 42% in September 2002 and only 38% in April.
The proportion of adults intending to put money into an ISA in the next few months increased from 26% in June to 31% in September - its highest score since the Bulletin began in March 2002. Intention to invest in shares directly or through unit trusts rose from 11% in June to 14% - and from 17% to 22% among higher income households (over £25,000).
Life and pension expected activity: Quarterly results September 02- September 03
(% of respondents expecting to undertake the activity)
Base: 2,000 adults aged 16+
| Type of contribution | Sep-02 | Dec-02 | Mar-03 | Jun-03 | Sep-03 | | Regular pension | 33% | 32% | 35% | 32% | 32% | | Regular life | 26% | 23% | 27% | 25% | 28% | | Lump sum life/pensions | 8% | 8% | 8% | 6% | 7% |
The percentage of consumers intending to put a deposit down on a property to buy is back up to 9.5%, from 9% in June and 9.4% last September. Much of the increase in demand is from older buyers (often cash buyers for investment) who have replaced first time buyers in purchaser profile during 2003.
While expected demand for mortgages remains fairly strong, there is less appetite for consumer credit. Around 13% of consumers expect to take out consumer credit in the coming months - up from 12% in June but down on 17% in March - strongly influenced by plastic card borrowing and overdrafts in the run up to Christmas.
Overall UK consumer confidence has experienced the longest spell in negative territory since the early 1990s -ten consecutive months. Confidence is still higher in the North (0 to date in 2003) and Scotland (-2) than in the Midlands (-6) and the South of England (-7).
Commenting on the findings of the survey John Gilbert said: ' The improvement in the stock market has certainly boosted investment sentiment in an economic climate that remains uncertain for many people - especially in the south of England. Maintaining a high level of cash balances is a sensible move particularly at a time when the interest rate cycle may be about to turn. The outlook for both consumer saving / investment and lending businesses in the final months of 2003 looks very promising'.
* The Financial Activity Bulletin is produced every January, April, July and October, and costs £275 for a single copy or £950 for a yearly subscription. More details from ruth.ramm@martinhamblin-gfk.co.uk
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