Consumer optimism at highest level since 1980s

Consumer confidence is back at its highest since the late 1980s, according to a new survey yesterday. Further evidence of the booming economy came from a strong pick-up in the commercial property market, although the housing market apparently paused for breath last month.

"It is eerily reminiscent of the last boom," said Geoffrey Dicks, an economist at NatWest Markets. "The good thing is that the election has come earlier in the cycle this time around, and the government will be able to tighten policy as soon as it is out of the way."

Consumer optimism picked up sharply across the country in the first quarter of the year, according to a survey published by Business Strategies Ltd (BSL).

The consultancy found that, thanks to the prospect of free building society shares, optimism about the economy in general and household finances had risen markedly, while concern about unemployment was falling. The balance of optimists over pessimists, at 24 per cent, was the highest since mid- 1988.

The survey reported that the South-east and the northern regions would gain most from the windfalls. The former has the biggest population in the UK, while savers in Yorkshire and the North-east will benefit most from the Halifax and Northern Rock conversions.

David Fell, BSL director, said: "The feelgood factor is being put down to the windfall gains and consumers are not seeing the Government as being responsible for these."

But he said the economy was not yet expanding on a late- 1980s scale. "The connection between house prices, confidence and consumer spending is not as strong this time around," he said.

Confidence rose fastest in the East Midlands and the North, but house price rises have been greatest in London and parts of the South-east.

There was some support for this view in mortgage lending figures published by the British Bankers' Association yesterday. Although the banks lent 10 per cent more than their recent monthly average in March, the BBA said this reflected an increase in their market share.

Tim Sweeney, director-general, said: "Overall demand for mortgage finance has been restrained somewhat." He suggested fears of higher interest rates after the election and a shortage of properties in some areas might be to blame.

The commercial property market has continued to see strong demand, according to a report from the Royal Institute of Chartered Surveyors yesterday. Confidence in the sector was the highest since the survey began three years ago.

Graham Chase of Chase & Partners, a RICS spokesman, said: "Confidence seems to be strong across the regions." The difference between now and the late 1980s was the absence of much speculative development so far in this cycle, he said.

Despite the differences between this boom and the last one, all economists agree that the windfalls this year make for a great deal of uncertainty about how fast the economy will grow.

Mr Dicks said that even on a cautious assumption about how much of their windfalls people would spend, consumer spending would grow by 4 per cent this year. It would need to be reduced in order to head off the threat to inflation next year.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea