Consumer confidence in UK continues strong growth

Consumer confidence in the UK continued its strong growth in January.

This is according to Lloyds Bank, which has released its Spending Power Report. It found that optimism rose to 129 points last month, constituting the biggest increase since November 2010. Additionally, the study found attitudes towards personal finance are the most positive it has ever recorded.

57 per cent of respondents stated they felt their situation was either excellent, very good or somewhat good, compared to 54 per cent in December. Meanwhile, confidence in the UK's economy rose a further 12 points from the previous month, achieving an increase of 91 points since the beginning of January 2013.

The employment situation in the country is another cause for optimism according to the report. Only 27 per cent of those surveyed had a negative opinion, a fall of two per cent on December and 12 per cent from the year before.

Although essential spending grew during January, the overall level has not changed much over the last month. Fuel costs continued to be a key issue, with 77 per cent of respondents identifying them as a source of inflation. 

Chief economist at Lloyds Patrick Foley commented: "With the pressure on consumer wallets from essential spending remaining muted, if employment continues to firm and, looking ahead, wages begin to rise, boosting spending power, the greater capacity of consumers to undertake discretionary spending should place the recovery on a still-firmer footing.”

The report also states the future continues to look bright, with more people feeling they will be better off in the next six months than they are now. However, this is not likely to translate into higher consumer spending, as the number of respondents who felt they would raise expenditure over the next half of the year fell to minus nine per cent.

On top of this, the number of people who felt they would be able to successfully pay off their debt rose, with the balance of opinion between those thinking they would be able to clear more of what they owed versus less increasing from seven per cent to 11 per cent in January.

By Amy White