Election concerns kept shopping trips in check
HOUSEHOLDS’ confidence in their spending power took a step backwards last month in the run- up to the General Election, a report has found.
However, overall financial confidence remains at record high levels.
The Lloyds Spending Power report had shown confi dence at an all- time high in March – but the index reading fell back by three points to 155 in April as the election loomed.
People’s feelings towards their current and future fi nancial situations levelled off during the month, with political uncertainty potentially holding back confidence in their personal and household fi nances – plus the country’s finances – which all fell back, the research found.
For the fi rst time in 2015 so far, people’s confi dence in their future situation also fell.
Lloyds said that people’s expected future spending remains “stable”, with about twothirds ( 65 per cent) of people surveyed not expecting their spending habits to be different in six months’ time.
Patrick Foley, chief economist at Lloyds Bank, said: “Households retain a positive view of their fi nancial situation, as a pick- up in wage growth and muted infl ationary pressures combine to strengthen real incomes.
“A more cautious assessment of future prospects continues to prevail, however.
“But against a backdrop of improving labour market conditions, and the lifting of some near- term uncertainty following the election, a solid pace of growth seems likely to unfold this year.”
Despite the pause in the recent improvements seen to people’s confi - dence levels, households’ overall financial confidence still remained close to record high levels, according to the report, which started in early 2011.
Offi ce for National Statistics ( ONS) fi gures recently showed that infl ation turned negative for the first time in more than half a century last month.
Chancellor George Osborne hailed the ONS fi gures as “good news for family budgets”. The Consumer Price Index ( CPI) measure of inflation dipped to minus 0.1 per cent, the ONS said.
Economists broadly expect the latest fi gure to bounce back to a positive number for May, rather than heralding a persistent spiral of falling prices. The Lloyds survey asks 2,000 bank account holders about their current and future spending habits, and how their commitments affect their spending power.
Claire Garrod, head of personal current accounts at Lloyds Bank, said: “Spending power paused for breath in April, with the political uncertainty in the UK seeming to impact financial confi dence, which dropped back compared to March.
“However, despite this backwards step, confidence remains at a very high level and has been on an upward trend so far this year.”