New research from Barclaycard has revealed that consumers have continued confidence in their own financial health.
The latest research, which studies the country’s spending patterns and confidence levels, found that 71% feel optimistic about their household finances when thinking ahead to the next three months. Additionally, 74% are confident in their ability to live within their means each month – up eight percentage points from January 2015.
This comes as Barclaycard found that 58% of respondents are feeling confident in their ability to spend more on non-essential items. These ‘lifestyle upgrades’ should result in spending uplifts for the retail and leisure sectors. Out of the items consumers plan to upgrade, new clothes, electronic devices and more meals out were each cited by a third of people (at 39%, 36% and 31%, respectively).
Underlining this sense of growing confidence, 34% plan to make at least one major purchase – the type that only comes up every few years or so – in the next 12 months. 52% of these are planning to spend on a big family holiday or overseas trip, and 37% are eyeing new furniture. 33% are considering purchasing an item for their hobby such as a camera, while 27% are in the market for a new car and 18% a house or flat.
16% of those who plan to up their spending in 2016 will do so because they feel better off now than they have before and 13% say that after ‘austerity fatigue’, it’s time to treat themselves and their family. However, 30.2% consumers cite necessity as the driving factor, saying they just ‘need to spend money on this item’. An ingrained search for value is a motivator for 19% of shoppers, as they plan to spend more simply to take advantage of great deals.
Households across the UK are currently benefitting from benign prevailing economic conditions with annual inflation remaining close to zero since the start of 2015 and employment up to 74%, the highest since records began in 1971. Barclaycard said it remains to be seen, however, whether the most recent downbeat economic news will have a negative impact on consumer confidence.
In the last quarter of 2015, Barclaycard data showed consumer spending growth continued to rise, with overall spend up 3.5% year-on-year. Online shopping in particular reported its strongest-ever quarterly growth, at 16%. Entertainment growth was in double digits (10.2%), whilst household and travel spending saw an uptick of 3.5% and 7.0% respectively.
Chris Wood, chief operating officer at Barclaycard said: “Consumers are starting the year with higher levels of confidence, thanks to lower fuel costs and interest rates, rising employment and real wage growth. As a result, they’re appearing more willing to make those bigger purchases that only come up every few years. These increased levels of confidence should be an encouraging signal for retailers, especially those selling holidays, cars and household goods.
“Spending on non-essential items, resulting in a further boost to the UK economy, looks set to continue as households plan to spend more on treating themselves and their families, thanks to months of careful budgeting and falling prices on essentials. But it will be interesting to see whether rising concerns over the global economy impact these plans, causing consumers to draw breath and slowing the pace of spending growth as we move forward into 2016.”