What will it take to stop consumers’ annual descent into Christmas debt?

Will we ever stop spending money we don’t have?

You might think that the long and dismal recession would have put a dampener on our need to splurge. But the latest retail analysis figures show that the Boxing Day sales attracted the highest number of shoppers since records began.

Up to 12 million people hit the High Street looking for bargains some 24 hours after Christmas Day.

That’s a massive 20% increase on the number of shoppers who turned out for the sales on Boxing Day 2008. And Boxing Day was by no means the start of our national festive spending spree.

British shoppers spent £132 million pounds online on December 25 alone, up almost a third on the same day a year ago, according to figures from payment processing company Retail Decisions.

Meanwhile, research from AXA Home Insurance shows that the amount spent on the average child's Christmas stocking this year soared to £305 - almost three times the typical cost 60 years ago. The main reason for this is that while a couple of oranges and some sweets may have sufficed in the past, today’s children – the consumers of tomorrow – want stockings stuffed with the latest electronics gadgets, and hang the expense.

Nick Kidd, head of home insurance at AXA, said: "The traditional 1960s sock stuffed with sweets, chocolate, toys and books has been replaced with a sack full of MP3 players and computer games."

For many families, the stocking presents are also just the beginning - with the average parent spending a further £238 on Christmas presents for their children.

Far from preventing people splashing out, more than half the population planned to spend the same as last Christmas this year despite the recession, with one in 10 people increasing their festive outlay.

And so they did, according to the Christmas statistics gathered by the British Retail Consortium (BRC).

BRC director general Stephen Robertson said: "Despite the last-minute hurdle thrown at shoppers by the weather, it's been a healthier retail Christmas than last year.”

So much for economists’ hopes that hard-pressed Britons would take the lessons of the recession seriously and stop overspending on their credit cards!

One of the reasons we spend so much is that we literally blank out how much we are paying out on our plastic in the excitement of the festive season.

The AXA research indicates that most parents are in denial about how much they are spending; with the majority estimating a total stocking spend of less than £85. That means they’re spending well over three times the amount they think on stocking fillers alone!

It gets worse

We are unable to stop ourselves even when we know that we’re storing up trouble for the future.

More than six million Britons will not be able to pay their bills because of excessive spending this Christmas, according to research carried out over the festive period. And a further 3 million people were still paying off their Christmas 2008 debt burden as December 25 rolled around again.

Almost one in 10 people have had to borrow from friends or family, or some other source, to cover Christmas costs, and 13% expect to find it hard to cover their household bills in January because of their inability to rein in their Christmas spending.

But despite knowing they were overspending, a third of those who responded to the survey said they felt guilty if they did not live up to the expectations of their family and friends at Christmas.

The group is predicting a record 154,355 people will be declared insolvent during 2010, and it is expecting a high proportion of these people to realise they are unable to keep up with their debts during the first few months of the year.

Even these dire statistics are not expected to stop our thirst for consumption, though. Four out of five retailers who responded to the latest BRC survey said they expected retail sales in 2010 to be the same as 2009 - despite concerns over rising unemployment.

They know just from looking at their own industry that the recession will claim more jobs before it has finished with us - nearly a third of retailers told the BRC that they expect to decrease employment in 2010.

But they’re not stupid, they know that we are perfectly willing to spend ourselves into the ground – even when the chips are down. Robertson added: “It's reassuring that our snapshot shows no retailers expect sales in 2010 to be worse than this year. However factors, such as rising unemployment are at the heart of retailers' concerns about how the recovery will pan out.”

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