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British households favor savings on expenses in the midst of concerns concerning dark economic prospects, despite the drop in loan costs, which has a certain relief, according to research which signals a potential traction on growth.
February was considered a “good time to save” by a net of 30% of consumers, the same proportion as in January, data from the GFK research company showed on Friday.
The figure is just shy of the crisis of 33% after high financial and well above the average of less than 2% between 2008 and the end of 2020, before the cost of living crisis and a high increase in interest rates.
The distinct overall confidence index of GFK – A measure of the way people consider their personal finances and their wider economic prospects – increased by 2 percentage points to less than 20, helped by the drop in the quarter -point price of The Bank of England at the beginning of the month.
The survey was carried out in the first half of February, because concerns increased that poor economic growth and sticky inflation could trigger a period of “stagflation” and experienced companies higher prices and job cuts Follow tax increases in the fall budget.
Official Data published Wednesday have shown that inflation has increased more than expected to a 10 -month higher 3% in January, while the economy barely increased in the second half of 2024.
Neil Bellamy, director of consumer insights at Nielseniq / GFK, said the results stressed that people “would put money for a day of rain [because] They do not have much confidence in the way the economy takes place. ”
Many households saved rather than spending “because they think there could be more problems to come”, which means “less money in the economy,” he added.
The monitoring views of the GFK sub-index on the general economic situation increased by 3 points over the month, but were still deeply negative at less than 31.
The survey suggests that the gap between the strong growth of wages and low consumption expenditure could continue, which limits the prospects for economic growth.
Tuesday’s official data showed that wages adapted to inflation have increased to the fastest since 2021 in the three months and December. But household expenditure per capita dropped in the third quarter of 2024, contributing to low GDP growth.
The sub-index following the share of consumers saying that it was the right time to make large purchases increased by three points, extending the recovery of the stockings observed at the height of the cost of living crisis, but was still negative At least 17. During the six years before the pandemic, average reading was positive.
The greatest improvement was in the way consumers saw their personal finances for the coming year, with an increase of four points to more than two withdraw the measure of the negative territory.
Bellamy said that BOE’s decision to reduce interest rates from 4.75% to 4.5% this month would have “brightened the mood of certain people” such as mortgage holders and buyers potential.
But he added that “the majority is still struggling with a cost of living crisis which is far from over. Prices are still increasing above the BOE lens; Gas and electricity bills are a challenge for many households. »»
The Boe Catherine Mann rate division told Financial Times that slowing down consumers was the reason why it Voted for a jumbo half-point cut At the meeting of the central bank on February 6.
“We have observed the increase in real income for some time and with an increase in real income, consumption should be more robust. I thought it was going to happen last year. I was talking about savings being dry powder for consumption. It did not materialize, “she said in an interview.
