Shadow side to surge in consumer optimism in economy

The latest Consumer Insight Tracker from Which? suggests that Britons are feeling more optimistic about the UK economy.

More consumers (36%) now think the economy will get better in the next 12 months, compared to those (29%) who think it will get worse.

However, worries about rising food, fuel and energy prices are still high, with 9.5million households currently cutting back on essentials.

According to the study, nearly a third of consumers are finding it difficult or very difficult to survive on their earnings and one in five has anxieties about job security.

Consequently, 36% of people questioned cut back spending on essential household items last month, compared to 25% in July 2012.

One in four dipped into savings to cover  spending and one in five used an authorised overdraft facility.

Which? executive director, Richard Lloyd, comments: “While this surge of optimism shows that consumers are feeling more positive about the future of the economy, it isn’t filtering through to how people feel about their own personal financial situation.”

He adds: “Unless things improve we won’t see the all important rise in consumer spending that is so vital to the UK’s economic recovery.”