News: Confidence in UK economy continues to climb

Wed, 27 Nov 13

But the gains this month have been uneven: sentiment about the housing market paused after a run of sustained improvement in recent months, and the sentiment balances about personal finances and future discretionary income both eased back this month.

This easing in confidence comes against a backdrop of very modest wage growth, despite continued gains in employment and an economic recovery in progress.  The most acute pressure for consumers continues to be gas and electricity spending, where spending growth remains high at around 8% on a year ago, with gas and electricity prices being a source of inflation concern for 79% of respondents.

But growth in average overall spending eased further to around 2% on a year ago in October, as spending growth fell back most notably on food and fuel. In line with this, while fuel prices are a source of inflation concern for 60% of respondents, this is the lowest since the beginning of the survey.

Patrick Foley, chief economist at Lloyds Bank, says: “After a sustained run of stronger confidence readings, the pace of improvement in sentiment has eased back a little.  But with the economic backdrop firming as the UK recovery takes hold, and essential spending growth easing back, looking ahead we are likely to see consumers better placed to undertake discretionary spending, and so to further support the economic recovery.”

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