Christmas is a time for rudolf, reindeer and going into the red

A new report from Money.co.uk suggests that 30 million Brits will fall into the red this Christmas, as the temptation to overspend on festive cheer threatens to create an £8 billion January hangover.

This year, the nation is expected to spend £11 billion over Christmas, yet the research found that, whilst 31% of adults are worried about paying for Christmas, just 15% have spread the cost over the course of the year. The rest will use a combination of credit cards (14%), savings (10%) and ‘money available at the time’ (71%). According to a similar study from Abbey Savings, Brits will use £3.45 billion pounds of their savings this year to help cover their Christmas spending.

In some cases, the impact of these spending habits appears to be long lasting debt, with 10% of those in the Money.co.uk study – equivalent to 4.7m adults – admitting that they are still paying off debts from Christmas 2008.

Money.co.uk argues that if current trends continue, each household will spend close to £500 on food and presents, even though average disposable income per family per week stands at just £164. As a result, the report states, many households will suffer even more than usual in January, particularly when the Christmas splurge is combined with cost of winter fuel bills.

But Brits at least have good intentions about the amount they intend to spend. 43% intend to spend less on gifts, 31% will buy presents only for their immediate family, and 14% will recycle and pass on unwanted presents

Chris Morling, managing director, money.co.uk said:

“There is no reason at all why families across Britain should not have a wonderful Christmas this year, but you have to worry about the effect all this last minute spending will have in January. Lots of people are likely to be very short of cash going into the New Year, which would not make for a great start to 2010.”

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