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Now household confidence perks up

Last week we highlighted Ernst & Young research on the high street, saying that consumers were likely to step up their spending after years of subdued growth.

Now comes further evidence that household financial confidence is on the rise, with a survey showing that people are feeling more positive about their household finances than at any time since 2010…

Financial research company Markit says its Household Finance Index (HFI) has reached its highest level for more than three years. The index for June equalled the survey's previous high in February 2010.

However, the reading is still below 50, meaning that the majority has noticed a decline in its standard of living. Any reading above 50 signals an improvement.

Says Markit senior economist Tim Moore, “Households' perceptions of financial stability are now at a level unsurpassed over the past four-and-a-half years."

There was also an improvement in people's expectations about their finances in the year ahead, although again most people still expect things to get worse.

The index measuring workplace activity was above 50 for the fifth month running, but slipped from 53.3 in May to 52.8 in June, suggesting people are less confident about job security than they were.

The survey does not suggest a return to the boom conditions prior to the financial crisis. And household incomes are likely to remain under pressure for the forseeable future, though higher personal allowances will help a little.

But the key point is that some stability could soon be returning to the high street after years of misery. And that rebalancing of the economy towards exports for a healthier recovery? That still looks a long way off.