Over recent months the financial headlines have been filled with doom and gloom about the global credit crunch, which made its way across the England from America last summer. The onset of the global credit crunch brought with it a wide range of problems in the financial markets, and the mortgage sector in particular has suffered with the number of mortgages available being cut by two thirds since last summer, and credit conditions in all areas of the financial industry far tighter than they were before.

Many industry officials have been talking about the effect that the global credit crunch is going to have on the economy, stating that consumers will have to really tighten their belts and this will result in spending levels being cut enormously. However, it appears that many consumers do not feel that the global credit crunch will have any effect on their spending and lifestyles, indicating that things may not be as bad as many have indicated.

Of course, consumer finances have been affected over recent months, not just because of the global credit crunch, but also because of rises in the cost of energy usage, which is due to rise again later this year, increases in other bills, soaring petrol prices, and an increase in the cost of food, all of which has impacted in consumer finance. However, a survey was recently carried out by Zurich insurance, and the results showed that around 36% of consumers do not feel that the global credit crunch will have any effect on their spending levels.

The credit crunch will affect those looking to borrow money in many cases, as some people – particularly those with damaged credit – will find it difficult to get credit because of the tighter credit conditions in play. However, for over a third of consumers spending habits and lifestyles will not be affected. Interestingly, around 13% of respondents said that they would cut back on savings and investments in order to reduce outgoings, but 43% said that they would not cut back on spending – a figure that rose to 49% in London.

Michael Portillo recently commented on the global credit crunch and debt levels in the UK, and he said: ‘I think that we have a lot further to go in terms of our problems. The government has been borrowing too much. The economy has been besotted with debt, in both personal and national terms and it has also been besotted with property prices.’ He went on to state: ‘I think the fragile confidence in the economy will be aggravated by the fragile confidence in financial institutions and Parliament too, such as with issues concerning MPs expenses.’

The study also showed that over half of consumers still consider property to be a good investment despite falling house prices, although on this issue Portillo said: ‘Property prices have been so over-inflated in the UK and I believe that they are the single greatest cause of social inequality in this country.’

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