Confidence among consumers has risen further as lockdown restrictions ease, but they are only cautiously optimistic, a survey has suggested.
The GFK consumer confidence index for April edged a point higher to -15, having last month surged to its highest level since the start of the pandemic, climbing seven points on the back of news that social distancing rules could be lifted by the summer.
Although more than half the population has received a single shot of a Covid-19 vaccine, GFK said that people were sounding a note of caution because of new variants that are more resistant to vaccines.
Joe Staton, client strategy director at GFK, said: “The improvement in the consumer mood since January is welcome, but the pandemic has hit household finances hard and on the road ahead we will still see concerns over new variants, rising inflation and the debt overhang.
“Nevertheless, there’s every chance that as the recovery gains momentum and the numbers get stronger, confident consumers will continue to spend and drive the wheels of UK finances into the summer and beyond.”
The rise in the index was driven by optimism about the economy. The index measuring the general economic situation over the next 12 months rose by six points to -11, considerably higher than its pre-pandemic level of -30. The forecast for personal finances over the next year was unchanged at 10, up from 4 in February last year.
On some measures, households are feeling more confident than they were before the pandemic. Economists are forecasting a strong economic recovery over the summer.
“This clear trend of growing confidence reflects the forecast of a rebound for our economy during the second half of the year,” GFK said.
Consumption dropped more sharply than incomes during the lockdowns, which means that many households have built up substantial savings during the year. Economists hope that people will draw on these savings to help to fuel the economic recovery.
The Bank of England estimates that between £150 billion to £180 billion extra has been saved during the year and that between 5 per cent to 10 per cent of this will be spent over the coming years. Britons continued to add to their savings over the past month, with GFK’s savings index climbing by one point to 22 in April. It is 17 points higher than it was at this time last year.
There are already signs that a consumer-led recovery is under way. Figures from the Office for National Statistics show that shoppers flocked to the high street when non-essential retailers opened their doors last week. Credit and debit purchases of clothes and furniture rose to 89 per cent of pre-pandemic levels in the week to April 15, up 26 percentage points in a week.
Footfall in the week to April 17 was at 75 per cent of its level two years earlier, up 31 points on the previous week. Restaurant bookings were at 60 per cent of their average level two years ago.