Two thirds of British workers financially unprepared for the economic downturn

Two thirds of British workers financially unprepared for the economic downturn

"Two thirds of working population dramatically change their spending habits but as yet not concerned that they will be made redundant"

With Britain officially in a recession, the overwhelming majority of those in work have not saved enough to ride out unemployment even for a short period of time, according to research commissioned by MCR, the corporate restructuring and insolvency specialists.

With redundancies being announced almost on a daily basis the research has also highlighted that some 70% of those in work have only enough money saved to last out two months if they lost their jobs. Only 10% of the UK population felt that their jobs where under threat; most remained pretty convinced that they would ride out the recession.

Two thirds of the sample - 64% - stated that they were already changing their ways, reconsidering traditional spending habits and lifestyle choices as the recession bites deeper and deeper. However this could be too little too late for many.

Steven Muncaster, partner at MCR, stated: "These figures paint a serious picture for many. Putting this into context - if 10% of the UK working population is concerned about personal bankruptcy as a result of losing their job that translates to over 2 million people. And with so few prepared financially for the economic downturn then it is no wonder that the overwhelming majority are already reviewing their personal spending habits and changing the way they live now,"

"However as we have seen in recessions in the past changes in personal spending can and do have a dramatic impact on the overall economy putting strain on sectors such as retail, leisure, housing, construction to mention just a few. We are already seeing what many believe to be the biggest downturn in decades in these markets and that in turn leads to a collapse in confidence and the loss of jobs," he added.

Key findings include:

70% of those questioned stated that they had enough money to last anywhere between a week and two months. However:

11% had made no preparation at all,
10% believed they could last a week or under,
28% up to a month and
21% for up to two months

Amongst the over 55's however, over 28% believed they had saved enough to see them through for over a year. The figure collapsed amongst the under 34's where the overall figure was 6%!

Spending habits are already undergoing dramatic change with some 64% of the sample stating that they were already changing their ways, cutting back on none essential spending now

This became more apparent amongst the ABC1 social group where 68% were changing habits already, as opposed to the C2DE social groups where 59% were altering spending patterns

Critically, 10% of the working population are concerned about personal insolvency. On a more positive note 65% of the population is not at all worried.

Perhaps this may come as no surprise given the fact that only 14% of the sample was actually concerned about losing their job in the current economic climate.

The majority of UK workers claim to be very well informed about the current financial state of the companies they are working for. 74% of those asked in the survey felt that they had a fairly good idea of how their own company was performing.

Yet, despite the gloomy economic news, 53% of those asked were not at all concerned about their company going into administration and only 14% were concerned about losing their job.

UK workers are however taking steps to get prepared in the event of job loss. 18% would be willing to talk to creditors to restructure personal debt, 17% are already increasing savings, 16% stated that they would be prepared to sell personal assets and 64% are already changing spending habits. Critically 23% of the same sample had no idea what to do in the event of being made redundant.

Facts from The Insolvency Service

In 2008 67,428 individuals were made bankrupt in the year
39,116 entered into Individual Voluntary Arrangements (IVAs)
The total is therefore 106,544
Whilst this is lower than either 2006, the highest year on record, or 2007, the underlying trend is up
IVA numbers were down overall
Bankruptcies were the highest ever

About MCR

MCR was formed in April 2001 to offer turnaround, restructuring and insolvency services of outstanding quality to banks, lenders, business owners and individuals in the mid-market sector. It aims to provide the most practicable ways to resolve issues affecting business performance.

The firm has ten partners who practice an ethos of high-level involvement to ensure that each assignment capitalises upon the expertise and knowledge of the whole team.

MCR regularly handles significant projects across a range of sectors and has been involved in a number of high profile cases. MCR is increasingly being asked to restructure businesses and find turnaround solutions to help companies avoid formal insolvency. Sectors include property, manufacturing, printing, recruitment, hotels, leisure, e-commerce, automotive, telecommunications, music, entertainment and construction.

For more information, www.mcr.uk.com

For further information, please contact

Richard Merrin
Spreckley Partners Limited

T: 0207 388 9988
E: merrin@spreckley.co.uk