CONSUMERS are enjoying a boom year as prices stay flat and wages rise, according to analysts at Deloitte who say it could be the best year for households since 2005.
And the economy could be accelerating further. Economists at EY today disagreed with the Office for Budget Responsibility and the International Monetary Fund, forecasting a very strong 2016 for UK GDP.
Growth is set to come in at 2.8 per cent this year and three per cent in 2016, EY said, as the Eurozone recovers and as cheap oil and the strong pound help out consumers.
“With less than a month now until the election, the economy and businesses seem to be powering through relatively unscathed,” said EY’s chief economist. “Despite a softer performance from business investment in recent months, we’re likely to see the pace of spending by firms gather again later this year as companies hone their strategies to tap into buoyant consumer confidence.”
Foreign firms are already investing more in the UK, with Chinese, European and US buyers lining up to snap up British businesses, to benefit from the economic success story.
That confidence boom was underlined by Deloitte’s consumer tracker, which has risen to its highest level since the index began in 2011.
The net percentage of households which received a pay rise in the last quarter came in at 14 per cent.
“With the recent return to real wages growth and further falls in unemployment, consumer finances are starting to normalise,” said Deloitte’s chief economist Ian Stewart.
“This points to an acceleration in consumer activity and suggests 2015 may well be the best year for consumer spending since 2005.”
However, the study also showed that 40 per cent of households are worried the General Election could affect their finances, which puts a temporary dampener on confidence.