ZPG PLC January 28, 2015
Consumers are failing to see the benefits of Britain's economic recovery with just one in 10 feeling better off, research showed today.
Only 9 per cent of households said their financial situation had improved during the past month, as Britain's accelerating GDP growth failed to feed through to their wallets, according to the Centre for Economics and Business Research and YouGov.
People felt particularly gloomy about the housing market, with the groups' indexes that measure changes in house prices in the past month and expectations for future growth both falling.
But on a brighter note, people felt more confident about their job security.
The downbeat mood was seen across the country, with around twice as many people in every region of Britain claiming their finances had deteriorated in the past month as those who said they had seen an improvement.
The groups warned that the low level of consumer confidence exposed Britain's "economic fragility".
They added that the economy risked slowing in early 2015 as confidence fell back and consumers failed to feel the benefit of faster growth.
Stephen Harmston, head of YouGov Reports, said: "It is quite a bleak picture.
"Consumer confidence has dropped away from its highpoint of last spring and summer as the housing market stutters and household finances are too stretched to pick up the slack and generate optimism.
"Despite talk of the recovery gaining ground, consumer confidence is stuck at similar levels as this time last year."
The groups added that while pay was now finally increasing faster than inflation, it would take time for households to make up years of lost growth in the aftermath of the crisis.
The findings are bad news for the housing market, which began to slow in the second half of last year as affordability became stretched.
Buyers are unlikely to return to the market in high numbers if consumer confidence remains low and household finances are stretched.
The Cebr finding that households are feeling under financial pressure was backed up by research from property outsourcing company LMS, which found that one in four people who remortgaged in December increased the size of their loan to ease cost of living pressures.
Around 24 per cent of people taking out a new home loan increased the size of their mortgage by more than £1,000 to free up capital to either consolidate their debts or fund other purchases.
Nearly two-thirds of people said they were tapping into money tied up in their home to make the most of the low mortgage rates currently on offer.
Overall, people who unlocked equity increased the size of their mortgage by £28,200, the highest level since LMS began tracking the data.
Just over a quarter of people questioned said they thought interest rates were going to increase, which the group said may explain why they opted to remortgage in December.
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