Scottish consumer confidence has returned to pre-pandemic levels during the second quarter, rising by 7% from the previous quarter, according to Deloitte.
Confidence is at its highest level since the third quarter of 2019 and increased by a record 8% year-on-year, albeit from a low base in the second quarter of 2020.
Deloitte’s analysis is based on responses from more than 3,000 UK consumers - 313 of which were based in Scotland - between 18 and 21 June 2021, as Scotland postponed its move to the lowest level of Covid-19 restrictions.
With Scotland’s vaccination programme enabling the gradual easing of restrictions, sentiment around the state of the economy grew by 22% points, compared to the previous quarter.
This confidence is also reflected by UK businesses, with chief financial officer optimism, as measured in the recent Deloitte CFO Survey, near its highest level in 13 years. Crucially for consumers, 76% of CFOs anticipate increased hiring in the year ahead – the highest reading in almost seven years.
Consumers in Scotland are increasingly optimistic when it comes to individual measures of consumer confidence.
This includes general health and wellbeing, which rose by 16%, and job security, with confidence rising by 6% when compared to the previous quarter, which brings Scotland almost in line with the rest of the UK.
Debapratim De, senior economist at Deloitte, commented: “With an overwhelming majority of respondents reporting increased savings, the stage is set for a consumer-driven rebound in activity.
“We expect the six months between April and September to deliver greater growth than seen over the four years before the pandemic.”
Discretionary spending in Scotland increased by 14% points in the second quarter, with 80% of respondents disclosing that they have saved money over the course of the pandemic.
However, not all consumers have seen an increase in disposable income and the pandemic has perpetuated savings inequality, with a fifth of consumers not saving at all since March 2020.
Ben Perkins, head of consumer research at Deloitte, commented: “While pent up demand has been a key driver of discretionary spending this quarter, the issue might be on the supply side – the pandemic has exposed structural flows and capacity issues.
“Leading consumer businesses are already rethinking their business models and adapting their supply chains, but many others are struggling to adapt.”
When Scottish consumers were asked about their future spending intentions in the next 12 months, almost half said they will be spending on holidays and hotels (43%) and around a third on eating out in restaurants (32%) and going out (37%).
This comes as further easing of restrictions is expected in Scotland in August.
Gavin Hood, advisory corporate finance partner at Deloitte, said: “The leisure and hospitality industry has had a torrid time, but there are encouraging signs that the stronger level of optimism amongst consumers could translate into increased leisure spending activity in the UK.
“The lifting of restrictions, improving weather and the continuation of the summer of sport, could see an acceleration of leisure sector spending during the next few months - the challenge for business leaders will be how to juggle scarce staffing resource to meet this increased demand.”
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