LONDON: UK consumers remain confident about their personal finances despite showing markedly less optimism about the wider economy, a new survey has revealed.
According to the latest Lloyds Bank Spending Power Report, based on a poll of 2,000 consumers conducted by research firm Ipsos Mori, nearly two-thirds (64%) reported feeling positive about their personal financial situation in June.
That was up slightly from 63% in May and just two percentage points lower than in June 2016, just before the shock result of the referendum on the UK’s membership of the European Union, FT Adviser reported.
Since then, the value of the pound has fallen, causing the price of food and other goods to rise, yet the survey suggested UK consumers appeared relatively unfazed when it comes to their own personal prospects.
For example, 80% said they felt optimistic about their own job security, although only just over half (53%) were positive about employment prospects nationally.
Further evidence of the disparity between consumers’ personal outlook and that of the national economy came with the finding that only a third (33%) reported feeling good about the UK’s financial situation, down from 45% in June last year.
Emma Greenwood, Head of Personal Accounts at Lloyds Bank, said concerns about the national economy could feed through into reduced consumer spending.
“Despite positive perceptions of their own personal finances, the difference in sentiment towards the country’s financial situation points to a lingering consumer unease about the broader outlook. For some, this may reinforce a reluctance to spend,” she said.
“Meanwhile, the brisk pace of price rises will keep household budgets under pressure. Even though inflation dipped a little in June, prudent households will want to take stock of their finances and ensure they are prepared for a greater squeeze on their spending power.”
The Lloyds report came a day after the respected GfK UK Consumer Confidence Index reported that sentiment about current and future economic conditions had fallen to levels last seen in the immediate aftermath of last year’s Brexit vote.
GfK said the UK’s overall index score in July was -12, two points lower than in June, although – as with the survey for Lloyds Bank – consumers appeared to be much more upbeat about their personal finances.
Its forecast for personal finances over the next 12 months increased two points to +2, or three points higher than in July 2016.
Data sourced from FT Adviser, GfK; additional content by WARC staff