Lloyds Bank reports consumer confidence towards UK economy significantly above last year’s level
20 January 2014
- The Lloyds Bank Spending Power Report finds that consumer sentiment has risen 21 points from this time last year, as this month reaches 123 points
- Confidence in the UK's economic situation continues to firm compared to last year, rising 93 points from December 2012 with further gains in sentiment about employment and housing
- However, attitudes towards consumers’ personal financial situation remains consistent with a year ago, despite essential spending growth easing further dropping to around 1%
The Lloyds Bank Spending Power Report for December has found that consumer confidence has started the new year higher than this time last year, with consumer sentiment rising 21 points over the course of the year to 123 points, despite some easing on the month.
Notably, confidence about the UK’s economic situation saw the greatest improvement over the course of the year, rising a total of 93 points from December 2012 to 206 points this month. However, the continued gains in confidence about the economic situation are not yet translating into improving sentiment about the personal financial situation, which has seen little change over the past 12 months.
This is despite essential spending growth easing further, to around 1% from approximately 1.5% last month, reducing the stretch on consumers’ pockets, and reflecting falling spending on fuel. Spending growth on gas and electricity bills remains high, at around 6.5% compared to last year, and remains a source of inflation concern for 79% of respondents. It is likely to ease in the coming months, reflecting the recently announced cuts to gas and electricity prices by some suppliers. Additionally, food prices were a source of inflation concern for 74% of respondents, likely reflecting consumer anxiety about food spending over the Christmas period.
Patrick Foley, Chief Economist at Lloyds Bank, says: “Consumer sentiment has firmed markedly over the course of 2013, reflecting the improving economic backdrop as the UK economy has emerged from its downturn, unemployment has fallen, and inflation has returned to the government’s target. Looking ahead, easing pressure on customer wallets bodes well for their ability to expand spending, and to support the recovery into 2014."