Economic optimism highest since last August

Stephan Shakespeare
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THE latest Bloomberg/YouGov Household Economic Activity Tracker (HEAT) results released today show that optimism about the economy is at its highest level since August 2010, recovering from an all-time low of -36 in March (positive minus negative) to stand at -24 in April. This improvement is likely to have been driven by three main factors: More positive economic news; for example 10 per cent people fewer people now expect unemployment to rise a lot (23 per cent in April, 33 per cent in March).

Encouraging signs at the coal face of the British economy; 23 per cent of people saw business activity pick-up at their place of work last month compared to 18 per cent who saw it decline and worker’s expectations for their business to improve over the next 12 months went from +8 to +13.

The royal wedding; with fieldwork having taken place in the last few days we can hypothesise that the feel good factor generated has built on the improved economic conditions helping to engender a mood of greater optimism in the country; it will be important to see that optimism maintained into May and beyond.

It isn’t all good news however with inflationary expectations still extremely high; 80 per cent expect prices to rise over the next year, 31 per cent expect them to rise significantly. These fears impact behaviour with 52 per cent of Brits being more price-sensitive than they were a year ago.

Despite that the general picture is certainly rosier than March with much room remaining for improvement. The graph of optimism over the last year shows that we are in as strong a position as we have been for a while but we only need to extend the time frame to see that there is still a long way to go before we reach the levels achieved in late 2009 (when even then sentiment was negative).

Stephan Shakespeare is chief executive of YouGov.