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Beating the credit crunch

[April 2008]

With the effects of the credit crunch taking hold UK consumers are looking to make spending cut backs on holidays, says a new report.

Rising interest rates, gas and electricity prices, council tax, water rates and weekly shopping bills are now squeezing British incomes so that luxury purchases such as holidays, home improvements, clothes and cars are suffering.

According to The Independent, the annual survey by leading market research company Mintel reports that one in five Britons (12 million people) say they plan to cut back on a summer break this year.

The paper quotes the report: "The likelihood is that holidays will still be taken but inevitably in the form of cheaper options, or else shorter-duration breaks which match the household cash-flow."

There are a number of ways to save money and still enjoy a revitalising break, something which many of us consider to be an essential part of life.

Rather than waiting until the last minute in the hope of a late bargain that may never materialise, we should still try to book our trip early. If we're searching for a specific resort on a specific date at a good price this is especially true.

Many holiday companies also offer money-saving incentives such as additional child places, complimentary car hire and free days for booking in advance.

Pre-booking airport parking, airport hotels and airport lounges ensures you get the cheapest price and also guarantees your place so there's no last minute panic at the airport.

It is often possible to adapt travel plans and look at alternative destinations and accommodation that give better value for money. We can also look at the duration of our holiday and perhaps take a couple of shorter breaks rather than one long stay.

School holidays are notoriously more expensive than other times of the year so it may be appropriate for some people to avoid these dates to get a cheaper deal.

UK householders can also make significant savings by shopping around for day to day goods and services such as home and car insurance; phone, television and broadband packages; supermarket shopping; and energy suppliers. Comparison websites such as or are an invaluable resource in the search for the best deals.

The Independent's report quotes Peter Ayton, Mintel's chief statistician, who says, "People are clearly starting to get a sense that things are not as easy financially as they once were.

In light of the credit crunch, borrowing has now become harder and we are likely to see even more people having to make sacrifices when it comes to their spending in the future."

It is thought that those with large mortgages - young people, single people and families with young children - have been hardest hit by the credit crunch.

A new report from debt management specialists TDX Group estimates that one million people in the UK have 'problem debt' amounting to around 25 billion pounds. They predict that the credit crunch could double the number of IVAs (individual voluntary arrangements) and debt management plans taken out in 2008 over 2007.

British Prime Minister Gordon Brown was in the United States recently to discuss the implications of America's impending recession on global finance with Wall Street bankers and President George W Bush. Our struggling leader is hoping to boost the UK economy and his own plummeting popularity.

During the ten years that Brown was Chancellor of the Exchequer tax increased from 17 per cent to 21 per cent as a proportion of income, another factor in the current cash squeeze on UK consumers.

by Maxine Clarke