The financial sentiment of families has improved by 19 percentage points since the last Autumn Statement, research from Lloyds Bank has revealed, suggesting that the improved economic situation is beginning to feed through.
According to the latest Family Finances report, feelings towards the economy are growing increasingly positive across all household types. Although the figures show that people still feel negative overall, the balance of opinion on the UK's financial situation has significantly increased, growing from -54% at the time of the last Autumn Statement to -35% today.
This rising positivity could have been fuelled by a number of different factors, such as improved economic growth, falling inflation and reduced unemployment, while the addition of rising house prices means many people now have a lot more equity in their home – which means many could be thinking about remortgaging.
Families are becoming increasingly positive in their outlook for the future, too, with a balance of 16% thinking that their financial situation will improve and they'll have more disposable income in six months' time. Interestingly, this is in sharp contrast to those without children, who still have a neutral outlook at 0%.
Spending pressures remain
Families' improved positivity comes despite the fact that a large proportion of their household budget still goes on essential bills. The figures show that seven in 10 households with children spend at least three quarters of their income on bills and essentials, while 20% spend all of their income each month, leaving them without any disposable income whatsoever.
Many households feel they're spending more on basic essentials than they were a year ago, too: 50% of those surveyed said they're spending more on utility bills, 37% are spending more on water, 44% have higher petrol costs and 46% spend more on groceries. As well as spending more on essentials, many people also believe they're spending less on leisure items (42%) and clothes (34%) than last year, highlighting the increased pressure a lot of household budgets are under.
Philip Robinson, savings director for Lloyds Bank, commented: "Families are still feeling the pinch, with spending on bills continuing to take up most of their household income. Improvements in the wider economy have not yet taken the pressure off household finances, but these improvements are having some effect, with families thinking they'll have more disposable income in six months time."
Hopefully, this extra disposable income will have a positive effect on the savings habits of families, because current savings levels are still worryingly low. The survey found that 32% of families weren't able to save anything at all in the preceding 12 months, up 2% from last year, while across the population, 50% have less than two months' income in savings – suggesting that many wouldn't be able to cope with an unexpected financial shock.
Bearing this in mind, it's all the more positive that families are feeling more confident in their financial futures. The improved economic environment could be starting to have an effect, and it's hoped that in the next few months, families will really feel the difference in their budgets. Being able to stash away more in savings accounts could boost positivity even more, ensuring families are completely financially prepared.
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