Brits are ready to reach for their wallets once again as the latest research reveals that consumer sentiment reached a new high of 112 points in June.
With the UK’s economy finally showing signs of a recovery, consumers have opted to loosen the purse strings – despite their budgets being constrained by the rising cost of energy bills.
This is according to the findings of the Lloyds TSB Spending Power Report, which also revealed that more than two-thirds (69%) of consumers are spending more than the same time 12 months ago.
“As the outlook for the UK economy gradually improves, firming consumer confidence remains vital to a self-sustaining recovery,” said Patrick Foley, chief economist at Lloyds TSB.
“More positive sentiment is therefore good news and, supported by greater stability in households’ essential spending, should embolden consumers still further. But areas of pressure still remain, notably on energy bills, acting to restrain the improvement in spending power.”
So aside from an increase in spending on utility bills (9%), and a marginal increase (2.5%) in spending on food and drink, just what are consumers splashing their cash on?
Here’s a quick overview of consumers’ current spending habits.
Smartphones and tablets
Never ones to be without our array of gadgetry, it seems that Brits are keen to get a hold of the most up-to-date smartphone and tablet technology.
Figures from the British Retail Consortium (BRC) showed that year-on-year searches for tablets have increased by 132%, while searches on smartphone devices have increased by 66%.
Peter Fitzgerald, Retail Director, Google, outlined one of the potential reasons behind this staggering growth.
“The growing multi-screening phenomenon across the UK – where people use their connected devices whilst watching TV – is also reflected in the growth in queries coming from tablets and smartphones,” he said.
And it isn’t just those who have healthy bank balances that are investing in the most innovative smartphone and tablet technology.
Research from Endsleigh shows that students are heading off to university with an average of £2,000 of gadgetry in tow. This includes items such as laptops, net books and smartphones.
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While many Brits would love to squirrel away some of their hard earned cash for a rainy day, ring-fencing a portion of our monthly income to direct towards our savings account or cash ISA can be an uphill battle.
Research conducted by Halifax showed that while more than three-quarters of Brits had managed to put away an average of £829 over the last three months, more than a third (35%) admitted that they had dipped into their savings to the tune of £1,824.
And what did we use to justify this expense? Our annual holidays of course. Heading off to foreign climes for our annual stint in the sun topped the list of reasons we raid our savings for. 21% of those questioned admitted doing so, and with the lure of the Mediterranean ever-present, who can blame them?
Weekend breaks followed in second place, with Brits happy to draw on their savings to get some much needed rest and relaxation.
If the height of the recession was all about creating bargain home-cooked meals using a few store cupboard staples and a few value brand items, the upturn in the economy is set to spell a resurgence in heading out to restaurants and cafes for favourite meals.
Figures from Deloitte’s Consumer Tracker show that consumer sentiment leapt by seven points to -29% in a year-on-year comparison.
This improved confidence has led increasing numbers of consumers to resume their extensive programme of leisure activities, with Brits planning to spend more on eating out at restaurants in the third quarter of the year (-16% vs. -19% in Q2 2012).