The latest Lloyds Bank Spending Power Report shows that people in the UK are feeling significantly more negative about the country’s financial situation than 12 months ago.
The monthly poll – which sees Ipsos MORI survey over 2,000 adults with bank accounts across the UK – found that 67% of people reported feeling pessimistic about the UK economy in August compared to just 58% in August 2016, up nine percentage points.
Public optimism about inflation has also seen a more dramatic fall over the last year with only 37% of those surveyed feeling positive about current levels, down 17 percentage points over the last 12 months.
However, UK consumers are feeling far more optimistic about their personal financial situation than the country’s as a whole. 63% of those polled feel positive about their personal finances, a figure consistent with the 65% seen in August 2016.
Rising inflation continues to concern consumers. When comparing their spending habits to this time last year, the proportion of people claiming that they spend more on essentials has increased across many categories, with the most significant increases being for energy and food. 49% of those polled said they are spending more on groceries than in August 2016, a 20 percentage points increase year on year. The same increase has been seen for gas and electricity bills. This time last year, only 25% of consumers said their spending on gas and electricity had increased over the previous 12 months. This figure is now at 45%.
35% say they are spending less on treats or going out compared to last year, up five percentage points on August 2016.
However, those that believe they will have a higher future disposable income in six months’ time has increased by five percentage points since July to 24% and up 4pp from August 2016.Another encouraging sign is that 29% of consumers say that they expect to be saving more over the same period, a rise of seven percentage points from 12 months ago. The proportion intending to pay off more debt has also increased by 4pp, to 22%, over the past year.
Robin Bulloch, managing director of Lloyds Bank and Bank of Scotland, said: “Consumers are feeling significantly more pessimistic about the nation’s finances than they were 12 months ago. People are telling us they’re increasingly worried about higher inflation and are spending more on essential items than last year.
“However, there are encouraging signs that some consumers are more positive about their own finances with a significant increase in those believing they will have a higher disposable income in six months’ time.”