Spending Power Report suggests financial uncertainty in long-term

The latest Lloyds Bank Spending Power Report indicates that consumer confidence is improving in the short-term, but the longer-term outlook is more un…

The latest Lloyds Bank Spending Power Report indicates that consumer confidence is improving in the short-term, but the longer-term outlook is more uncertain. 

People's attitude towards their personal financial situation has risen by three percentage points (pp) since it was last measured in April and the study suggests there are several reasons for this. 

Claire Garrod, head of personal current accounts at Lloyds Bank, states that an end to uncertainty surrounding the election will have helped to improve sentiment regarding financial security. 

The feeling towards employment also improved by eight pp and Lloyds suggests this could be linked to the fact that unemployment has continued to fall and is currently at 5.5 per cent. Coupled that with increasing signs that wage growth is rising and it's easy to see where this optimistic outlook is coming from. 

Low inflation, which was 0.1 per cent in May, has also helped to boost households' spending power. 

The research reveals that some 78 per cent of those questioned have access to disposable income, and this figure has remained unchanged since Lloyds Bank's last report. However, this means that 22 per cent of respondents have no additional cash to spend as they wish. The report also doesn't take into account those struggling to pay for essentials.  

Patrick Foley, chief economist at Lloyds Bank, said: "While households continue to have an upbeat view of their current financial situation, confidence in the outlook continues to drift down." 

The Future Situation Index, which measures how confident people feel about their finances in six months' time, is the lowest it has been since August 2013 and has fallen for three consecutive months. 

In November 2014, the index was at its highest and the dip over the recent months indicates that fewer people expect to be able to pay off more of their debt, and save more. There are also a smaller number of consumers who believe they will increase their discretionary income in the coming six months.  

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