UK Consumer Confidence at Over Nine-Year High
A file photograph of pedestrians walking past a store on Oxford Street in central London.Reuters

British consumer morale struck its highest level in more than nine years in June, according to a survey by global market researchers GfK.

The monthly GfK consumer confidence index rose to +1 in June, from 0 in May, its highest since March 2005, although below a Reuters forecast of +2.

The survey, conducted between 2-18 June, suggested consumer spending will remain among the biggest drivers of the nation's economic recovery, with optimism about the UK economy over the next 12 months at its highest level in about a decade.

Meanwhile, results from a separate survey on 27 June indicated that another key economic driver -- the housing market -- cooled a bit over the last month.

Data firm Hometrack showed house prices rose 0.3% in June as against a 0.5% increase in May 2014. The coverage of districts with price increases over the month declined to 32% in June from 50% in April.

"The last time the [consumer confidence] index was consistently positive was back in 2002 and this must be the next target from the government's point of view as we get close to the election period," said Nick Moon, managing director of social research at GfK.

"The next few months will be particularly interesting, since the previous venture into positive territory was merely transitory – two isolated months in January and March 2005."

"Pent-up demand has been feeding into the [housing] market over the last 18 months creating the upward pressure on house prices. This trend now appears to be running out of steam with no change in demand for housing over the month," said Richard Donnell, Hometrack's director of research.

Hometrack's poll results come a day after the Bank of England moved to curb riskier mortgage lending, because the rapidly-reviving housing market is one of the biggest threats to the UK economic recovery.

From October 2014, just 15% of a financial institution's new mortgage lending will be allowed to comprise loans of which the value is 4.5 times the borrower's income.

This restriction will only apply to banks whose residential mortgage lending each year tops £100m. The policy will be enforced by the central bank's Prudential Regulation Authority (PRA), which oversees the financial sector.