Despite reports of a growing sense of confidence in the City, with around half of the UK’s banking and financial professionals stating that they are feeling positive about the year ahead, City workers are apparently remaining much more cautious when it comes to spending.
Whilst remaining outwardly bullish about their prospects for 2011 (around 41 per cent of those questioned believe that their company will increase staff numbers this year), it seems that a combination of the new European regulations over bonuses and an on-going climate of austerity have led to a more restrained approach when it comes to their own finances.
A recent survey found that City workers spent up to 50 per cent less on overseas purchases in 2010 than in 2009, and found that clients who are based in the City made far fewer transfers (typically used for one off purchases) too. In total the amount transferred was down by some 50 per cent. The figures also demonstrated an increase in property-related transfers, such as mortgage payments and property maintenance.
A large proportion of the transactions which World First undertakes for City workers occur following the receipt of their annual performance related pay. Often this payment is received in a foreign currency and those living in the UK will either want to transfer their US dollar bonus into sterling, for example, or send the money to an overseas account if they are an overseas resident but are working in the UK.
With exchange rates continuing to fluctuate wildly on a day to day basis, the amount of money you could potentially end up with is also subject to significant change.
Many of our clients have come to us for advice about how to minimise their risk and use our products to plan ahead, so that they know in advance that their money is safe. A smart move in the current climate.
Despite the signs that the City is returning to ‘business as usual’, individuals are using their performance related pay to maintain their investments and balance the books. Many of our clients would have bought overseas property during the boom years and are now transferring money to maintain those properties or to pay off mortgages.
If our figures are anything to go by it would seem that City workers are clearly responding to the government’s calls to ‘show restraint’. But whatever you are using your annual bonus for this year, with ongoing fluctuations in the currency markets set to continue for the foreseeable future, some careful forward planning would be a sensible idea.
Jeremy Cook is chief economist at World First
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