UK households have expressed the most positive outlook for their finances for three years, according to the results of a new Markit poll.
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Markit’s household finance index increased from 37.7 in April to 40.8 in June and while this is still some distance from the 50 mark that indicates an improvement in consumers’ finances, it is still the best recorded reading since February 2010.
Consumers’ expectations for their finances over the next 12 months rose to their highest level since March 2010.
Tim Moore, senior economist at Markit and author of the report, argued that the findings reflect the continued, but gradual improvement in the UK’s economy.
“Improving household finance trends are an early indication that the UK economy has continued to strengthen in June. Households’ perceptions of financial stability are now at a level unsurpassed over the past 4½ years,” he said.
Recent figures from the Lloyds TSB Spending Power Report revealed that consumer sentiment towards their financial situation climbed in April in a month-on-month comparison, with the number of people saying that their finances were ‘excellent’, ‘very good’ or ‘somewhat good’ rising from 51% to 53%.
Similarly, consumers’ optimism about the housing market also received a lift month-on-month, with the number of people saying it was ‘excellent’, ‘very good’ or ‘somewhat good’ rising from 24% to 28%.
“It is good to see an improvement in consumer sentiment this month, particularly as it has largely been driven by consumers’ perceptions of their current personal finances, suggesting that the squeeze on household finances abated somewhat over recent months,” said Patrick Foley, chief economist at Lloyds TSB.
“However, we shouldn’t automatically expect the improvement in sentiment to translate into improved consumer spending, with reductions in some benefit payments, weak wage growth and slowing employment growth likely to be headwinds during 2013.”