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Roadmap Out of Lockdown Fuels Record Jump in Confidence

The first three months of 2021 saw a record quarterly rise in consumer confidence, rising six percentage points in the first quarter, to -11%, according to the latest Deloitte Consumer Tracker. Every measure of confidence saw both year-on-year and quarter-on-quarter growth, as consumers journey out of lockdown with a spring in their step.

Deloitte’s analysis is based on responses from more than 3000 United Kingdom consumers between 19th and 22nd March 2021, as the United Kingdom’s phased lockdown easing remained on track.

After entering the year under the tightest of lockdown restrictions, the reopening of schools helped boost sentiment around children’s education and welfare to -11%, up six percentage points on the previous quarter. Coupled with the continued speed of the United Kingdom’s vaccination programme, sentiment around health and wellbeing improved eight percentage points, to -26%, the highest level since the start of the COVID-19 pandemic.

With restaurants and physical non-essential retail remaining closed in Q1 2021, consumers’ pockets improved this quarter. Household disposable income saw a seven percentage point boost to -10%; marking a 17 percentage point improvement compared to the same period last year. Further, consumers’ confidence in their level of debt has tipped over to the black, at 1%, for the first time in ten years.

Economic recovery

The start of the pandemic in Q1 2020 saw economic sentiment plunge to an historic low. However, armed with a clear map out of lockdown, extended furlough support through to the autumn, and the vaccination programme continuing, consumer sentiment on the state of the economy grew to -61%, a quarterly rise of 12 percentage points.

With CFOs also hiring at their highest levels for nearly six years, consumers are optimistic about both their job security, and opportunities and career progression; each up by six and seven percentage points, respectively.

Consumers signal a Q2 spending spree

In an encouraging sign that consumers are preparing for further lockdown easing, discretionary spending grew this quarter, albeit by one percentage point. While net spending in most of the discretionary categories remain below where it was a year ago, there was strong quarterly growth in demand for holidays and categories related to socialising, such as going out and eating out.

With late June earmarked for the last of social distancing measures to lift, consumers expect to increase their spending across almost every essential and discretionary category. Net discretionary spending is anticipated to become positive for the first time, meaning the number of consumers expecting to spend more exceed those anticipating to spend less.

Reflecting consumer eagerness to spend, ‘going to a shop’ topped the list of leisure activities consumers are most likely to do after lockdown, with 63% saying they’d plan to return within a month of measures lifting.

Consumers head out, but remain hesitant about large events

With the exception of spending on in-home entertainment – up one percentage point in Q1 2021 – overall leisure spending this quarter remains well below year-on-year comparable. However, with lockdown restrictions beginning to ease, consumers are gearing up for a long-awaited return to hospitality and holidays.

Whilst limited to takeaway options over this period, eating out saw the biggest quarterly rise in net spending, up ten percentage points, to -43%, followed by drinking in pubs and bars; up nine percentage points compared to the last quarter.

Consumers are also looking to get away, with spend on holidays up seven percentage points this quarter, to -31%.

Whilst consumers seek to socialise again, they remain more hesitant, at least in the short term, on attending large events and festivals. Just 7% said they’d go to a live event within a month of being permitted to, with 25% preferring to wait six months or more.