Easing lockdown restrictions has lifted consumer confidence to its highest level since before the EU referendum, a survey suggests.
Household sentiment hit a score of 113.6 points last month, according to a gauge of the Centre for Economics and Business Research and YouGov. This was the highest reading since April 2016. The neutral mark is 100.
The findings suggest that households are sanguine in the face of growing fears that the emergence of new variants could derail the government’s plan for reopening the economy.
Kay Neufeld, head of forecasting at the Centre for Economics and Business Research, said: “Undeterred by the unusually wet weather last month, UK consumers have clearly made the most of their newfound freedoms and spent freely in shops and the hospitality sector. As the economic recovery gathers pace, labour shortages have come into focus as evidenced by further strong increases in both the backward and forward-looking job security measures.”
The booming property market lifted the headline confidence index. The government’s decision to extend the stamp duty relief for another three months beyond the deadline of March 31 has lifted house price growth to record levels. Homeowners are feeling more confident as a result. Confidence about house values over the coming year jumped by 5.1 points to 118.9.
Growth was also driven by feelings of job security. Hard-hit sectors such as hospitality are now rebounding strongly and are struggling to find enough staff to fill positions. Many are offering starting bonuses and higher starting salaries to attract workers. At 118.9, the sub-index for job security rose by 5.1 points to its highest level on record.
The findings are encouraging for economists who fear a big rise in unemployment after the furlough scheme ends in September. Forecasts have come down considerably over the past year and the jobless rate is now expected to peak at just 5.5 per cent. But the report also suggests that businesses are struggling to meet a surge in pent-up demand now lockdown is being lifted.
The sub-index for business activity over the past 30 days rose by 0.2 points to 110.3. There is greater optimism about the future, with the index for business activity over the coming year rising by 3.8 points to 127.