Britain's Top Earners May Splurge on Travel, Spend Less on Horses in 2011
Wealthy Britons Planning to Increase Spending in 2011, HSBC
Chris Ratcliffe/Bloomberg
Shoppers browse window displays of stores in the Burlington Arcade in London.
Shoppers browse window displays of stores in the Burlington Arcade in London. Photographer: Chris Ratcliffe/Bloomberg
Wealthy Britons plan to save less and spend more on travel, commuting and home improvements, HSBC Holdings Plc said, citing a YouGov Plc survey.
Households with a combined annual income of more than 100,000 pounds ($162,080) will probably increase spending by 7.8 percent in 2011, the London-based bank said in an e-mailed report today. The amount they save may drop 10 percent, while transport and travel expenditure may surge 65 percent. The biggest cutbacks include spending on horses and pets, beauty treatments and weddings.
The U.K.’s highest earners have faced higher taxes as Prime Minister David Cameron’s government seeks to tackle a record budget deficit. It has added to the previous Labour government’s squeeze on top-rate taxpayers by raising the capital-gains levy and limiting pension contributions. That’s on top of maintaining a 50 percent income-tax rate on earnings above 150,000 pounds.
“It seems saving is giving way to spending for many affluent households in 2011,” Richard Brown, Head of Savings and Investments at HSBC, said in the report. “It will remain to be seen as the year progresses if this is indeed the case and the correct decision.”
The households plan to spend an average of 87,380 pounds this year compared with 81,060 pounds in 2010, HSBC said. Spending on “general home improvements” may quadruple, while expenditure on loft extensions may jump 45 percent, as wealthy Britons extend current properties instead of moving.
The increase in spending on homes comes as reports show Britons have become less likely to buy property. Hometrack Ltd. said on Jan. 27 that house prices fell 0.5 percent in December as demand plunged the most in three years.
Tax Increase
The goods and services that will see the largest cutbacks among affluent Britons will be luxury and one-off big-ticket items such as spa and beauty treatments, weddings, birthday parties, jewellery and wedding gifts, HSBC said.
YouGov surveyed 1,017 adults between Dec. 3 and Dec. 9 for the report.
A separate report today showed national wage growth maintained its momentum in the three months through December. Incomes Data Services said the median pay settlement was 2.2 percent, matching the result for the three months through November. The data is based on 53 pay settlements affecting 943,485 employees.
To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net.
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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