LLOYDS BANK
SPENDING POWER REPORT
EMBARGOED UNTIL 00:01 HRS MONDAY 24 AUGUST 2015
Spending Power confidence drops in July
 Attitudes towards the current financial situation fall as perceptions about people’s
personal financial situation and Britain’s employment situation both drop
 However, July saw falls in year on year essential spending, with a continuing decline
in water bills
 Ahead of the new school year, the average intended spend in preparing children and
extracurricular activities is £335 on 4 to 10 year olds and £315 on 11 to 18 year olds
CURRENT SITUATION
FUTURE SITUATION
OVERALL INDEX
Down 4 points
Unchanged
Down 3 points
(to 214)
(at 109)
(to 161)
The latest Lloyds Bank Spending Power Report shows a fall in sentiment towards people’si
current financial situations in July. Following last month’s improvement and record high of 164,
the Overall Index has fallen by three points, driven by falling confidence towards people’s personal
financial situation and Britain’s employment situation.
Contrary to the upward trend observed over the previous two months, in July sentiment towards the
country's financial situation dropped by 5 percentage points (-5pp), peoples’ personal financial
situation dropped by 3pp, the country’s employment situation dropped by 2pp and sentiment
towards the country’s housing market saw the biggest fall by 9pp.
However, despite a decline in sentiment in July, Lloyds Banking Group economic data shows
continuing falls in essential spending compared to the same time last year. The negative growth in
essential spend stood at -1.1% in July, slightly higher than June (-1.2%). The slowing of falling
spend on fuel which had been seen over recent months has started to pick up again (-7.2%), and
falls in water bills (-1.2%) last month have continued.
In addition to this, the consumer research shows people who think they will have more money in six
months’ time has increased from 17% in May, to 19% in June and now stands at 21% in July,
reflecting a more stable Future Situation Index which remains unchanged this month.
Spending power for different consumers
Empty nesters in particular express less confidence this month in the country’s financial situation
(down 10 points), their personal financial situation (down 10 points) and the UK housing market
(down 18 points). At the same time, young singles feel significantly better about their personal
financial situation (up 28 points), the country’s employment situation (up 32 points) and current
levels of inflation (up 14 points).
Claire Garrod, Head of Personal Current Accounts at Lloyds Bank, said: “Spending power
confidence dropped back in July but it may be no surprise to see current spending power pausing
for breath. The summer can be an expensive time of the year with people putting money towards
paying off holidays and many families facing significant sums to get their children ready to go back
to school in the next few weeks.”
The cost of preparing children for the new school year
With the end of the summer holidays quickly approaching, parents’ thoughts will be turning towards
preparing their children for their return to school and the costs associated with this, at what can be
an expensive time of the year. The consumer research shows that the average intended spend in
preparing children for school and extracurricular activities is £335 on each four to ten year old and
£315 on each 11 to 18 year oldii.
For those children aged between four and ten, this spend is made up of £181 on preparing them for
school with items such as uniforms, coats, school shoes, PE kit, stationery and text books, and £153
on extracurricular clubs, classes and lessons. For those aged between and 11 and 18, these figures
are slightly lower at £167 and £147 respectively.
To prepare children aged between four and ten for school, those aged between 35 and 44 expect to
spend £213, which is 25% more than those aged between 18 and 34 (£170) and 88% more than
those aged between 45 and 54 (£113). This is also reflected in the spend on older children, with
those aged between 35 and 44 intending to spend £199 on each child, 31% more than those aged
between 18 and 34 (£152) and 43% more than those aged between 45 and 54 (£139).
Patrick Foley, Chief Economist at Lloyds Bank, said: “Sentiment among households remains
positive overall, but the recent dip in employment and some easing in the pace of wage growth may
have weighed on confidence slightly this month. Nevertheless, a stable view of future prospects
suggests consumer spending should continue to underpin the UK’s recovery”.
Ends
Notes to editors
Chart 1 – Spending Power Indices
The four indices are calculated to provide a reflection of the public’s attitude to the general economic
situation (the Economic Situation Index are composed of sentiment on the country’s financial
situation, the UK housing market, Britain’s employment situation and the current levels of inflation)
and their perceived current and future individual circumstances (the Current and Future Situation
Indices are composed of sentiment on personal and household financial situation, employment and
job security and perceptions of levels of spending, saving and debt payment). The Overall Spending
Power Index is a combination of the Current and Future Situation Indices. Full technical details
available at www.ipsos-mori.com/lloydsspendingpowerreport.
The Lloyds Bank Spending Power Report is derived from independent consumer research and current
account data of Lloyds Bank, Halifax and Bank of Scotland customers. This provides a robust and
representative sample of the entire UK market and its essential spending behaviours.
Essential spending components are made up of rent, mortgage and required debt payments, utility bills,
council tax, TV licences, food and fuel, which are identifiable from card spending, direct debits and standing
orders from current account data. There are strong calendar effects within essential spending components,
some of which will be accounted for using year-on-year growth rates while we attempt to adjust for irregular
calendar effects. As a longer history of data becomes available, the adjustment methodology may be altered in
future to better correct some of these changes.
Each month, over 2,000 adult bank account holders are asked about their current and future spending habits
and how their commitments affect their spending power. Consumer research is compiled in conjunction with
Ipsos MORI: Ipsos MORI interviewed a representative sample of 2,070 adults who hold a bank account aged
18-75 across the United Kingdom. Interviews were conducted online between 20th and 27th July 2015. Survey
data were weighted to the known population proportions of this audience.
Research conducted by TNS during January 2011 - December 2014 (Feb 2011 Base: 2001). Jan 2015 - May
2015 research conducted by Ipsos MORI.
The “consumer profiles” are a reflection of different life stages using demographic data to combine people
surveyed into groups. These profiles are created by using standard demographic data which includes, gender,
age, marital status and number of children under the age of 18 who live in the household.
These are defined in the following ways:
Young Singles n = 105
• 18-24 year olds
• Single or living with a partner
• No children
Families with kids n = 527
• 25+
• Any marital status
• Has children
Empty nesters n = 845
• 45+
• Any marital status
• No children in household
People or people’s refers to people surveyed as per Editor’s notes.
Calculations based on the average intended spend on preparing children for school and their extracurricular activities.
The full questions were: Please tell us, for each child who will be attending school in September, approximately how much
will you spend in total per child on preparing them for the start of the school year? Please include items such as uniforms,
coats, school shoes, PE kit and equipment, stationery, text books, etc. and Please tell us, for each child who will be
attending school in September, how much will you spend on extracurricular clubs / classes / lessons (both inside and
outside of school) when the new term starts per term. Please include any clubs /classes / lessons that may be provided by
either a school or an external club (i.e. football clubs, swimming classes, music lessons etc.)
i
ii
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