Confidence in UK economy grows following low unemployment

The UK economy is improving following lower unemployment numbers and improved wage growth. According to the Lloyds Bank Spending Power Report, “perception of employment situation and own job security” increased in November, corresponding with a seven year low in the unemployment rate.

The report also showed lower figures for spending growth, with spending in November being 1.6% lower than it was at the same time in 2014. Recently, concerns have been voiced over Britain’s high streets as sales hit a low. However, recent figures did show that retail sales growth exceeded expectations in November.

Economic recovery

The report stated that the overall spending growth rate last month could be caused by a decrease in food spending.

Patrick Foley, Chief Economist at Lloyds Bank, discussed the improvement in wage growth and its effect on the economy, stating: “With price pressures for essentials still subdued, and some improvement in wage growth becoming evident, households are continuing to feel better about their personal financial situation, particularly those who say money is tight. This bodes well for the UK’s solid pace of economic recovery being sustained in 2016.”

Stronger job creation

According to Foley, spending power confidence “took a step forward” in October after easing in recent months, “with stronger job creation and a further fall in unemployment likely contributing to the better mood among consumers.”

“And with essentials putting less pressure on household budgets, and some strengthening in wage growth unfolding, prospects for discretionary spending look bright in the run up to Christmas,” he added.