I was interested to read the Bank of England's quarterly bulletin today, which says higher mortgage payments are starting to put the squeeze on consumer spending.
Simply because although it is to be expected, I saw absolutely no sign of tightened purse strings on Oxford Street on Saturday, where people where handing over plastic and spending money like there was no tomorrow. Admittedly I was among the shoppers, but just to return my broken Christmas party shoes, I promise.
Research from Sainsbury’s Bank says that the nation will spend some £11.85 billion during the last week before Christmas - £2.7 billion more than the bank’s research identified this time last year. And around 8.6 million people intend to put half or more of their last-minute Christmas shopping on credit cards – an increase of 2.1 million on last year.
I find it worrying that despite tighter household budgets due to higher mortgage payments, people are not deterred and still spending a fortune on one day, which can take over a year to pay off. Around 4.4 million credit card users still haven’t cleared debts they ran up last Christmas.
We’re not likely to feel the full effect of the credit crunch until well into 2008, when I suspect many gifts have been tossed aside and people will be starting to regret putting Christmas on credit.