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Homeowners cut essential spending

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Lower gas and electricity prices have helped homeowners lower essential spending, a report has found.

Lloyds Bank looked at personal finances of people in the UK and said gas and electricity spending was down 7.2% and fuel spending had dropped 9.4%.

This essential spending is predominately made up of rent or mortgage payments, plus other debt payments, utility bills, council tax, TV licences, food and fuel.

In March, Brits said they felt personal finances were improving. On the bank’s index it said confidence had risen by 10 points to reach a score of 158.

Household finances improved by five percentage points, although people felt they were able to spend less on food and other entertainment at Easter.

Looking to the future, and with interest rates looking likely to remain flat in the short-term, the level of household debt is predicted to fall.

The survey found 34% of people plan to pay off debt while 70% want to save more cash, perhaps to spend on home improvements or property costs.

Patrick Foley, chief economist at Lloyds Bank, said people felt more confident about the wider economy, despite the upcoming election.

“As a stronger economic backdrop continues to develop, consumers are becoming more confident in both their own financial situation, and the country’s,” he said.

“And while political uncertainty looks likely to rise following the general election, household sentiment should be supported by the modest pickup in wage growth that seems to be unfolding. This suggests the UK’s economic prospects remain bright.”

Claire Garrod, head of personal current accounts at Lloyds Bank, said: “Spending power is continuing to grow and is being driven by more confidence about people’s current individual and household financial situations.”

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