Consumer Tracker: confidence gathers pace across the UK
21 July 2014
- Consumer confidence continues to improve and is now four points higher than a year ago;
- The North of England, Scotland and Northern Ireland see a six percentage point rise in confidence concerning household disposable income in Q2 vs Q1;
- Overall, confidence about disposable income increases by 11 points year-on-year;
- Confidence over level of debt falls two points since last quarter.
The North of England*, Scotland and Northern Ireland saw a sharp rise in consumer confidence in Q2 2014, according to the latest Deloitte Consumer Tracker. While consumers in London and the South East are the most confident, the North of England, Scotland and Northern Ireland saw consumer sentiment about household disposable income jump six percentage points from -25% in Q1 2014 to -19% in Q2 2014.
Across the UK, overall consumer confidence in Q2 2014 was four points higher than the same period a year ago (from -10 in Q2 2013 to -6 in Q2 2014). Sentiment about disposable income was up 11 points (from -29 in Q2 2013 to -18 in Q2 2014).
The Tracker also shows more consumers started a job (from 8% in Q2 2013 to 11% in Q2 2014) and fewer reported a loss or reduction of income (from 14% in Q2 2013 to 12% in Q2 2014).
Consumers indicated they are spending less on essential items, but spending more on discretionary items like clothing and footwear, which saw a nine point improvement (from -15% in Q2 2013 to -6% in Q2 2014).
Ben Perkins, head of consumer business research, commented: “Low inflation, or in some cases deflation, means that consumers are getting more for their money. Combined with the rising confidence in household disposable income, consumers are edging away from the defensive spending habits they adopted during the recessionary years and spending more on the things they enjoy.”
However, while most measures of confidence are up, consumers’ confidence in their level of debt fell by two percentage points (from -3% in Q1 2014 to -5% in Q2 2014), suggesting consumers may be responding to the prospect of future rises in interest rates.
Looking forward to Q3 2014, consumers indicated they plan on spending more on non-essentials like electrical items, eating out and short breaks, as well as spending less on utilities. However, while economists forecast a rise in real earnings over the next year, the Tracker shows that consumers are less optimistic.
Ian Stewart, chief economist at Deloitte, said: “We found half of working UK adults don’t think their salaries will increase in the next year. Such concerns, together with the forecast of higher interest rates, may explain why consumers have told us they are planning to repay more debt and save more in the next quarter.
“Over the next year, the question will be whether any rise in real incomes will be enough to counter the effect of potentially higher interest rates.”
Notes to editors
- The North of England includes the North West, North East, Yorkshire and the Humber.
About The Deloitte Consumer Tracker
The Deloitte Consumer Tracker is an economic update focussed on consumer spending attitudes and behaviours. Through a quarterly survey of 3,000 adult UK consumers it monitors the patterns of consumer expenditure on a category-by-category basis and the underlying drivers of spending behaviour, notably household disposable income and consumer confidence. It also considers consumers’ spending outlook for the next quarter.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.
Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.
“Over the next year, the question will be whether any rise in real incomes will be enough to counter the effect of potentially higher interest rates.” - Ian Stewart, Chief Economist