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
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project