Next year looks set to yield a brighter financial future for consumers as a report showed that householders’ confidence in their economic situation has soared to the highest level since records began four years ago.
The Lloyds Bank Spending Power Report found the continued decline in petrol prices, combined with falling utility bills and improved job security have all boosted optimism among consumers, driving the index up three points to 154.
November also saw sentiment increase 12 points compared to last month about the UK’s economic situation to 295 points – representing an annual jump of 79 points from the same time last year.
The monthly report was launched in January 2011, when Britain was still suffering from the after effects of the global recession. The study showed that all measures of consumer confidence – including attitude to the housing market; the overall national economic situation; their employment situation and their own financial situation – all rose in November.
Meanwhile, more consumers, making up around 23 per cent of the population, feel they will have more money in the future than those who believe they will have less at 17 per cent. A further 56 per cent believe the amount of cash they have will remain static.
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Petrol prices have plummeted in recent months, giving people an average of £69 extra to spend. Supermarket price wars have driven some of the decline, with Asda now charging 110.7p a litre for unleaded – the eleventh cut since the end of September –while global oil prices have also dropped significantly.
The RAC said earlier this month that it expected average fuel prices to soon hover at around 112p a litre – with the cheapest retailers selling fuel for well under 110p a litre.
Gas and electricity bills have also fallen as a mild winter last year meant people consumed less fuel – while reforms to the energy market have made it easier for consumers to find cheaper deals.
The average annual utility bill has fallen by around 6 per cent with a £80 saving on average, equating to an annualised decrease in spend of almost £150 per household for gas and electricity.
Patrick Foley, chief economist at Lloyds Bank, said: “Falling fuel prices and reduced consumption of gas and electricity are now adding up to a noticeable reduction in the cost of essential spending. Together with job security continuing to improve, particularly for those who say money is tight, this bodes well for an improvement in households’ disposable incomes and a continuation of 2014’s robust economic growth in 2015.”
Sentiment towards future saving has seen a slight decline of two percentage points and returns to levels seen in September at 12 per cent, however, compared to this time last year, opinion is up six percentage points.
Greg Coughlan, director of personal current accounts at Lloyds Bank, added: “The improvements we’ve seen over the course of the year are of great benefit to consumers. With consumer confidence at an all-time high for the end of 2014, this will hopefully help bolster spending into the new year.”
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