The members of the ‘Ostrich Generation’ are fully aware that traditional state and company pensions are not going to be as generous as past generations experienced, and know they will be living longer.
According to the report - The Future of Retirement: the future of planning - they are unproductive in working against this change and making preparations for their financial future. Alarmingly, the majority have made no plans as how they will fund their retirement.
HSBC questioned 1,000 working age Britons and found nearly one-in-five do not know what their main source of retirement income will be, with a further 21 per cent saying they will rely solely on the state pension.
Just under half expect to be worse off in retirement than their parents – three-in-five believe this is due to state and company pensions not being as generous as previous generations. And only 27 per cent believe they will be better off.
Overall, 68 per cent of those surveyed are worried about coping financially and 48 per cent fear they are not saving enough for their retirement.
However, despite all this, slightly fewer than four-in-ten Britons have actually got a financial plan in place that will provide for their future retirement.
Joanne Segars, chief executive of the National Association of Pension Funds, said: “Far too many people are trapped in the headlights when it comes to their own retirement. They know they'll need money in their older age, but they're doing nothing to prepare for it.”
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The figures for Government borrowing were released yesterday and with it they revealed a particularly bad start to the new fiscal year, with the highest figure ever recorded for April.
The Chancellor George Osborne will no doubt feel the pressure from the Conservative party right-wingers to take tougher action on spending cuts, as borrowing hit £7.7 billion, compared with £5.3 billion last April.
The new fiscal year got off to a bad start due to a fall in tax receipts and extra spending to finance the Treasury’s debts, the Office for National Statistics said.
As the angered public begin to feel the impact of the austerity measures taken out by the Government, on the other end of the spectrum the right side of the Conservative party believe the Chancellor needs to take an even tougher stance on cuts to services. This is due to the prospect of having a considerable rise in the UK’s public sector debt and to enable Mr Osborne to hit his debt reduction targets.
Mr Osborne has also been criticised by Labour who believe the cuts to spending were the cause of the fall in growth and tax receipts.
Recently, the National Institute of Economic and Social Research warned that lower growth over the next two years would hit tax receipts and the Government’s plan for debt reduction would be knocked off course.
At £54.1 billion, Government spending in April was 5 per cent higher than a year ago. This was mainly caused by a 26 per cent rise in interest payments to £1 billion as the Government services its growing debts and interest rates rise along with inflation. Tax receipts also came down by 0.8 per cent to £42.9bn.
David Hanson, Labour's shadow Treasury minister, said: "Cutting too far and too fast risks a vicious circle. Slow growth and more people out of work and on benefits will make it harder to get the deficit down. That's why the Government is now forecast to borrow £46bn more than they were expecting last autumn."
Samuel Tombs of Capital Economics was feeling more optimistic about the latest figures, saying: "These are just one set of figures and the trend in borrowing should improve as more of the spending cuts kick in later this year. What's more, last year's borrowing figures have been revised down from £141.1bn to £139.4bn.
"Together with last month's better figures, this has left borrowing in 2010/11 nearly £7bn lower than predicted by OBR back in March."
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With businesses continuing to struggle through these tough economic times, it would be beneficial for businesses to make changes in order to save money on energy bills that are continuing to soar. However, a new survey by British Gas Business has revealed that businesses are failing to take measures to reduce their energy costs by “ignoring energy efficiency”.
This news follows a warning from Centrica, the owner of British Gas Business, who said that energy bills are set to rise even further during the upcoming winter months. This is because its margins are being squeezed as the price of gas and power soars. Therefore, businesses should make changes now to avoid hard-hitting bills during the forthcoming winter.
The survey questioned 900 medium-sized businesses and found that 70 per cent are not currently carrying out energy efficiency measures, and one in three said they had no plans to carry out such measures in the future.
For those surveyed, energy bills represented almost a fifth of their annual operational running costs.
Following world events, such as the unrest in the Middle East and the earthquake in Japan, energy prices have already risen by 25 per cent in the last six months.
Even though energy prices are soaring, British Gas Business believes that the higher costs of energy did not “automatically” mean higher bills for businesses.
So what methods can companies use to ensure their energy bills are lowered, if high bills are not the fault of energy suppliers?
The survey found that 70 per cent of the companies had devices which allowed them to monitor usage and analyse data to control their consumption - these companies saw a return on their investment within 18 months.
If companies used devices such as this combined with employees making behavioural changes (i.e switching off unnecessary lighting and turning off plug sockets), British Gas Business said companies could expect to lower their energy bills by 10 per cent.
Help is also at hand from The Carbon Trust who is asking SMEs to use its online certification tool to recognise where they can cut their energy bills. And it would appear to be beneficial for small businesses to do so as the organisation claims small firms using the service had cut their energy costs by an average of £2,000 per year.
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Figures released later today are expected to reveal that the UK’s top five banks are not meeting their targets for lending to small businesses, which were set under the agreement with the Government’s Project Merlin scheme.
The figures, which will show if Barclays, Lloyds, HSBC, Royal Bank of Scotland and Santander are on target in lending the agreed £190 billion to businesses throughout 2011, will be published today by the Bank of England.
Back in February, in order to make funding more available for businesses that have been struggling during the economic crisis, the banks agreed that they would pledge £190 billion to British business under the Project Merlin agreement in 2011. This is compared with the £179 billion lent in 2010.
In the first quarter of 2011, lending is expected to collectively total £16.8 billion compared with the target of £19 billion, therefore a shortfall of around 12%.
Vince Cable last week said that he expected the banks to miss their lending targets and sent a warning to the banks that action would be taken by the Government.
“If the banks don't deliver, there are options open to the Government, including taxation,” he said.
However, the business secretary said that the banks would have the remainder of the year to increase their lending to meet the agreed amount under Project Merlin.
The Federation of Small Businesses says its members are continuing to struggle to get bank loans and other credit.
The Project Merlin deal was positive news for SMEs across the UK back in February. If the banks have not met their lending targets in the first quarter of 2011, let’s hope that the Government take action to ensure that these targets are met throughout the rest of the year and that funding is more readily available.
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This week it was announced that the Government has appointed retail guru, Mary Portas, to review the country’s high streets in a bid to decline rising shop vacancy rates and a move from consumers to spend in out of town shopping centres.
Apart from a general squeeze on consumer spending, highlighted by the Ernst & Young ITEM club report published on Tuesday, there is a move for shoppers to avoid shopping in town centres, as there is very little new or exciting to tempt them to spend their hard-earned cash.
This has led to a doubling of vacancy rates over the last two years and a plethora of chain stores and charity shops where independent stores used to thrive.
Figures released by the business department showed that more than a third of shops were vacant in the worst-hit town centres, such as Margate and Leigh Park in southeast England.
Town centres have also seen their share of total retail spending fall to 42 per cent last year from just under 50 per cent in 2000. Town centre sales grew 1.5 per cent from 2005 -10 compared with the 11.5 per cent increase enjoyed by out-of-town retailers.
"The high street should be at the very heart of every community, bringing people together, providing essential services and creating jobs and investment," Prime Minister David Cameron said. "So, it is vital that we do all that we can to ensure they thrive."
However, Portas will have her work cut out to rejuvenate high street spending and slow down the rate of ‘doughnutisation’ – the trend for shoppers to move out of the middle to out of town locations.
Since we have less to spend and busier lives, we are more likely to shop somewhere where we can get everything under one roof and make one trip in the car. It will be interesting to read her report, due out in the Autumn.
For more information, please visit www.milsted-langdon.co.uk
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