Shoppers to spend less at Christmas

Charitable donations have not suffered during the recession, research suggests

More than four in five people intend to spend about the same or even less this Christmas compared with last year, figures have shown.

The prospects for 2010 and 2011 are also poor, with incomes being squeezed by higher interest rates and taxes and unemployment continuing to rise, consumer research firm Mintel said.

But the firm still forecasts growth of 2% from last year in retail sales in December, driven by the recovery in consumer confidence, continuing low interest rates and a mini boom in sales before VAT goes back up in the new year.

An internet-based survey of 2,000 consumers found 86% would spend about the same or less than last year this Christmas, with 11% spending a bit more and 3% a lot more.

One in three consumers (34%) said they have a budget for spending which they stick to - up 2% from 2008 - while 40% usually spend more than they plan to and 6% tend to go into debt over Christmas.

But one in five people said that although money was tight, they still intended to splash out to make it a "good Christmas". This was the same as last year, but down from 32% in 2007.

Richard Perks, Mintel director of retail, said: "Consumer confidence has been steadily improving in recent months and the proportion of people feeling relaxed about their financial situation has been increasing, even though they know there are problems ahead.

"There's no doubt that consumer demand has held up far better than anyone expected a year ago and that is entirely down to the cuts in interest rates. Knowing that there are tough times to come, consumers will decide to have a 'good Christmas' while they can still afford it."