As figures released today reveal that the UK economy has nudged out of recession, new research shows that consumers are becoming less pessimistic about their finances.
The Household Finance Index survey, compiled each month by Markit Economics and YouGov, says there has been the slowest deterioration in household finances since the series began in February 2009. It also reveals the 12-month outlook for household finances to be the least pessimistic since the start.
However, fears of job security are still widespread and the effects of January’s snowy weather, alongside the return of VAT to 17.5% and post-Christmas efforts to save, were all possible reasons for a marked drop in consumer spending in January. Debt levels increased for the second month in a row, despite the fall in household spending.
Tony Diamond, consulting director at YouGov said: “Despite indications that households continue to be a little less pessimistic about their financial circumstances, particularly looking at the coming 12 months, the pre-Christmas spending we saw in December has been reined back again.
“However, the proportion of respondents who think that their income will be higher in 12 months’ time has jumped five points from December to 37%, the highest it has been, and fully 50% now believe that the value of their house will be higher 12 months from now, compared to just 13% when this index began last February, underlining what appears to be a more positive public mood.”
The survey is based on monthly responses from over 2,000 households.