Skip to content

UK Wages and Consumer Confidence Levels Have Risen

The latest figures show that consumer confidence and wages have both risen to their highest levels in more than a decade. These are both regarded as being signs that the British economy is bouncing back from a difficult period.

The Consumer Confidence Issue 

Poll results show that British households are now more confident about their finances and the economy in general. In fact, the numbers for February show the highest figures for this poll since it began over 11 years ago. The IHS Markit household finance index collates the results of a survey of 1,500 households. 

In January, it came back at 44.6. However, the following month saw it rise to 47.6. This may affect the recent trend for international debt collection, as businesses look to cope with the global slowdown and low consumer confidence.

It is also worth noting that this index hasn’t risen above 50 since the financial crisis of over a decade ago. The fact that it is on the way up suggests that families in the UK are now looking forward to the future with fewer financial concerns.  

Another sign of encouragement comes from the future household finance index. This looks at what people expect to happen in the next year. In this case, it was up from 49.6 to 52.7. The February total is a new record, beating the figure set at the start of 2015. 

The Growth in Wages

The increased consumer confidence seen in the previous point could be a reflection of the growth in wages in the UK. New numbers from the Office for National Statistics have shown that wages are now as high as they have been since the crisis in 2008.

In the quarter to December, weekly wages for British workers climbed to £512. After the figures are adjusted for inflation, this is the highest that they have been since back in March of 2008.

If we remove bonuses from the calculation, the annual growth rate of earnings for the quarter was 3.2%. It is also noted that the number of people in employment was up by 180,000. This led to a record number of 32.93 million in work, while the unemployment figure remains at 1.29 million.    

Another interesting statistic showed a further increase in the number of women in employment in the UK. An increase of 150,000 in the three months to December meant that the total is now at the record level of 15.61 million. 

The numbers paint an overall picture of wages rising at a faster rate than inflation. In real terms, people now have more spending power than in 2008. The average wage in March of that year was £510.96, when adjusted for inflation. It is now 65p higher.

Will It Affect Retail Sales?

It is to be hoped that these encouraging figures lead to an improvement in retail sales. December was the fifth consecutive month that there was no rise in these numbers. This is the longest spell with no increase since 1996. Indeed, household spending dropped by 0.6% in the final month of 2019.