Middle-earners who spend like millionaires

Britain has become a nation of wannabes, chasing a millionaire's lifestyle on a middle-class income.

Consumer spending rose 9 per cent last year to reach £1.09 trillion, according to retail analysts Mintel.

Spending on long-haul foreign holidays to the Caribbean, the Far East and the U.S. rose an astonishing 41 per cent in the past four years to hit £8 billion.

Sales of champagne and wine drunk in the home rose 26 per cent to £10.2billion in the same period.

There have also been big increases in spending on fashion, driven by a desire among some to copy names such as Keira Knightley, Victoria Beckham, Sienna Miller and Coleen McLoughlin, herself a dedicated shopper.

The study also highlights the booming celebrity culture, based around magazines and fashion lines launched by Kate Moss, Madonna and Kylie Minogue.

The increase in spending last year far outpaced any rise in wages, suggesting much of it was funded by borrowing.

This live now, pay later approach saw consumers putting more on their credit cards and borrowing against their homes.

Personal debt is now running at more than £1trillion, and there have been rising numbers of bankruptcies and home repossessions.

Mintel retail analyst Neil Mason said:

"Jet-setting, restaurant dining, sipping champagne and oversized designer handbags - all this glitz and glamour was once the reserve of the rich and famous, but our research shows even your average Joe or Jo is enjoying a taste of this luxury lifestyle.

"Despite rising interest rates, higher fuel costs and an uncertain housing market, we spent more in 2006 than in the previous year.

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"We can't get enough of celebrity life. Celebrity gossip-based magazines keep us all abreast of what they are doing, what they are wearing and where they are going.

"To help us emulate their style, more and more celebs are putting their names to fashion lines."

Spending on clothing and accessories rose by more than £3billion from 2002 to 2006 to hit £38.4billion.

Asked about future spending plans, 20 per cent of people are excited by the idea of a new wardrobe, while a similar proportion is prioritising eating out.

By contrast, paying off credit cards is key for 14 per cent and paying off the mortgage for only 10 per cent.

Mintel found the market for eating out was worth £17.7billion in 2006, up by 18 per cent in four years. It expects the figure to rise 27 per cent in the next six years, with an emphasis on gourmet food.

It said eating at home is also becoming more upmarket, with people much more interested in good quality ingredients.

Our homes represent the biggest financial outlay, accounting for £4 in every £10 we spend, from mortgages to flat-screen TVs.

Annually, spending on our homes is put at £400billion, both in repaying mortgages, home improvements and makeovers. The figure has risen by 65 per cent in four years.