British consumers’ confidence in their own finances has continued to rise, a new survey shows, as Prime Minister Theresa May prepares to trigger Article 50 for the UK to leave the EU.
More than two-thirds of consumers feel their financial situation is positive, after a five percentage point rise over the course of the month, according to a report by Lloyds Bank.
Confidence has been boosted as attitudes towards the wider UK economy have improved – while the economy has been boosted by the reaction of households who keep on spending.
The measure of positive sentiment towards the UK’s financial situation rose to 43 per cent, up three percentage points, while judgements on job security rose to 81 percent.
The UK economy has continued to perform strongly in the months since the EU referendum. Some economists were caught out by the continued strength of consumer spending, which actually led an acceleration in growth at the end of 2016 after a sluggish start to the year.
However, rising inflation and a weaker house prices outlook have dented British consumers’ longer-term expectations.
Consumer price inflation including housing rose by 2.3 per cent in the year to February, according to the Office for National Statistics, after the devaluation of sterling led to a big rise in import prices.
More than half of survey respondents reported they were worried about the prospects for price rises, the highest proportion since December 2014, according to Lloyds. However, disposable income levels remained broadly level.
Recent retail sales data bounced back in February to surprise many economists with its strength, but average of the last three months showed a weakening in consumer purchases.
Meanwhile, confidence in the housing market dropped by nine percentage points to hit its lowest level since July 2013, after a steep fall in confidence amongst homeowners.
Robin Bulloch, managing director at Lloyds said: “Despite a melting pot of economic uncertainty – from the prospect of Brexit to the impact of inflation – UK consumers are demonstrating a remarkable resilience when it comes to their own personal finances.
He added: “Of course the full effect of these factors will only truly be felt in the long run, and people may already have one eye on this when it comes to confidence in the housing market.”