ALMOST half of the region’s wealthiest people have cut their spending because of government austerity measures, according to a new survey.
Leeds-based wealth management company Pearson Jones consulted 847 clients, most of them from Yorkshire and the North East.
It found that 43 per cent of them had reduced their day-to-day spending and 29 per cent had deferred capital expenditure.
Peter Heckingbottom, investment director at Pearson Jones, said: “This research shows that even high-net worth individuals are cutting back on a variety of spending.
“At a time when many banks are not lending, a fluid economy partly depends on those with cash being prepared to spend but these figures show that the cautious atmosphere created by the global economic climate affects even those with substantial investments.
“Wealth is relative and it is not just those who are more understandably under pressure who are being more cautious.”
In the survey of clients with a minimum of £250,000 of assets, 34 per cent agreed that they had cut day-to-day spending and nine per cent strongly agreed.
Only 21 per cent said they had not cut their spending, while 34 per cent did not give a view either way.
Meanwhile, seven per cent strongly agreed they had deferred capital expenditure and 22 per cent agreed they had.
However, 24 per cent said they had not deferred capital expenditure, while 45 per cent did not say either way.
Mr Heckingbottom said: “It’s interesting that affluent people aren’t cutting back.
“That’s certainly good news for high-end brands, such as European car manufacturers.
“There is a continuing demand for high end products such as cars, home improvements, that sort of thing, amongst the affluent people in Yorkshire.”
But he said there was a drop in spending on the high street, which was concerning for retailers.
The survey also showed that, despite record-low bank interest rates and higher than anticipated inflation, investors were not pre pared to take greater risks. Only 10 per cent said they were doing so, while 52 per cent said they were not.
“That’s shown out really in the stock market,” said Mr Heckingbottom.
“It’s not surging because there isn’t huge demand for stock market equities.
“People just aren’t prepared to take the additional risk of the stock market because of the associated uncertainties.
“Anecdotally, we would say our wealthy clients are still spending capital when they need to and that’s brought out by the survey.
“We had noticed a far greater demand for investments than we have in the past. Stockbrokers are saying the same: new business on the stock markets and fixed interest markets is far greater than it has been in the past because of very low interest rates, but we’re talking about very small amounts – much smaller than we would have been before.”
With spending and investing reduced even among the most wealthy, Pearson Jones believes its latest figures send a warning over a proposal announced by Nick Clegg in late August to introduce a new ‘emergency tax’ on the assets of the country’s richest people.
The Deputy Prime Minister said those with the most should be contributing more to the economy, to help turn around Britain’s financial fortunes.
The Chancellor, George Osborne, said at the time: “I am clear that the wealthy should pay more which is why in the recent Budget I increased the tax on very expensive property transactions.
“But we also have to be careful as a country we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery.”
The results of Pearson Jones’s survey suggest that the most well-off people across Yorkshire are taking more care over their spending, just as the less wealthy have been doing, as the coalition Government implements its austerity measures.
Mr Heckingbottom added: “If taken as a national sample, these findings show that the coalition Government faces an uphill battle if it wishes to trigger a retail consumer spending recovery and makes one wonder what will happen if Liberal Democrat Party measures to tax the wealthy more become policy.”