Consumer confidence around household disposable income was at its highest in over three years in Q1 2015, according to our latest Consumer Tracker. This measure of confidence was 20 points higher than a year ago in Yorkshire & Humber and it is 26 points higher than when the survey began (-12 in Q1 2015 vs -32 in Q1 2014 and -38 in Q3 2011).

However, the General Election has been revealed as consumers' biggest concern, with 47% of consumers in Yorkshire & Humber saying they were worried it could affect their financial situation.  

With the recent return to real wages growth and further falls in unemployment, consumer finances are starting to normalise. This points to an acceleration in consumer activity and suggests 2015 may well be the best year for consumer spending since 2005. 

However, echoing our latest survey of business leaders, uncertainty ahead of the General Election is also being felt in the consumer sector. Consumers see the election as the number one concern in terms of their financial situation, eclipsing worries about pay, interest rate rises, public spending cuts and job insecurity. Political uncertainty has dampened corporates' willingness to take risk and to invest. While we see no evidence that political uncertainty has hit consumer activity, the General Election and its aftermath are clearly on the radar for consumers. 

The Deloitte Consumer Confidence index moved closer to positive territory in Q1 2015, driven mainly by the improving confidence in disposable income, with overall confidence in Yorkshire & Humber six points higher (-6% in Q1 2015 vs. -12% in Q4 2014). 

The net balance of households having received a pay rise has been growing.  In Yorkshire & Humber it has been growing since Q3 2014 (15% in Q1 2015 vs. 10% in Q3 2014). 

More consumers were able to increase their savings this quarter; in Yorkshire & Humber consumers' saving has increased by 1% in the same period. Overall the strengthening of people's financial positions has been helped by falling prices for essentials like food, energy and petrol, which has led to more discretionary spending. However, the growth in discretionary categories is mainly in services such as leisure and travel, suggesting that the retail sector is a little more subdued than the wider macroeconomic environment. 

The foundations for a consumer recovery have been laid and the improvement in consumers' financial positions looks set to continue, which should mean further rises in spending this year. Furthermore, with low interest rates, household debt interest payments as a share of income are also expected to remain low.

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