Economic confidence 'on the rise'

Consumer confidence in the economy grew to its strongest level in at least three years in February as the pressure on peoples' wallets continued to ease, a report has found.

Confidence in the UK's economic situation is on the increase, according to a survey
Confidence in the UK's economic situation is on the increase, according to a survey

The Lloyds Bank spending power report measure of consumer sentiment lifted to 130 points in February, marking the highest reading since the survey started in November 2010 and a 21 point increase on this time last year.

Confidence in the UK's economic situation generally has seen the biggest improvement and is now nearly 100 points higher than in February 2013, Lloyds said.

Just 27% of people surveyed think the country's financial situation is "not good at all", marking the lowest percentage since the survey began.

Sentiment towards the housing market is also at the most positive level seen by the survey, with 45% of people saying the market is either "somewhat good", "very good" or "excellent".

Lloyds predicts confidence in the property market is likely to improve further in the coming months, following the Government's confirmation in the recent Budget that the Help to Buy equity loan scheme to help people with a 5% deposit to get a mortgage is being extended to the end of the decade.

Growth on essential spending, including spending on food, gas and electricity and fuel bills is also falling back as the pressure on households eases.

In further signs that people are feeling a bit less squeezed, over two-thirds (68%) of those who have money left over at the end of the month said they planned to save it, up from 56% this time a year ago, according to the survey of more than 2,000 people carried out across the UK in February.

In last week's Budget, Chancellor George Osborne announced plans to give savers who have been squeezed by five years of rock bottom interest rates a boost, through the creation of a new £15,000-a-year "super Isa" allowance.

Patrick Foley, chief economist at Lloyds Bank, said: "With the pace of spending growth on essentials now more in line with wage growth, pressure on consumer wallets continues to ease.

"Meanwhile, the UK economic backdrop continues to improve, supporting ongoing gains in consumer sentiment."

The mood towards the employment market is also lifting, with one quarter (25%) of people saying it is "not good at all", which is less than half the 56% of people who said this two years ago.

Some 56% of people described their own finances as "somewhat good", "very good" or "excellent", dipping slightly by one percentage point on the previous month.