GfK UK consumer confidence index back at post-Brexit vote level

UK consumer confidence has been relatively buoyant in recent periods given the dire warnings that had been issued before the Brexit vote. But in July, confidence dipped to a level last seen in July 2016 in the immediate aftermath of that vote.


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Researcher GfK said Friday that confidence fell two points to -12 in July while expectations for the UK’s general economy over next 12 months dropped five points. In fact, four of the five measures in the survey decreased this month.

Joe Staton, Head of Market Dynamics at GfK, said the economic picture across the UK remains confusing and this mood is reflected in the Overall Index Score, which was down by five points at -12, exactly the same level as July 2016.

“It’s the sharp drop in confidence about the UK’s general economy – both looking back one year and ahead one year – that is driving the fall,” he said. “While there’s a small bounce in consumer views of personal finance looking ahead, that’s the only measure that’s up. All bets must now be on a further drift downwards in confidence.”

He added that while employment is “booming”, wages have fallen in real terms since 2008 once inflation is taken into account. And while consumers have increased borrowing to carry on spending, the household savings ratio is now at a record low, which is bound to make consumers nervous. “If Brexit negotiations continue to deliver more questions than answers, it’s unlikely the Overall Index Score will find any tailwinds for some time,” Staton added.

But while its index overall matched the level of this time last year, there were some strong variations across the different measures that make it up.

GfK said the index measuring changes in personal finances during the last 12 months actually decreased by one point this month to -2, that’s one point lower than this time last year.

However, the forecast for personal finances over the next 12 months increased two points to +2, three points higher than July 2016. So it seems consumers feel more cash-strapped than ever at present but think they might be a bit better off in the year ahead.

The measure for the General Economic Situation of the country during the last 12 months decreased six points to -31, six points lower than July 2016 but again, by contrast, further expectations were better than a year ago. GfK said expectations for the General Economic Situation over the next 12 months fell five points this time to -28, but that’s five points higher than July 2016.

Consumers clearly feel that the economy is not in a good state but they don’t feel quiet as pessimistic as they did in the weeks after the Brexit vote.

There was mixed news too on the Major Purchase Index. It decreased two points this month to -1, which is one point higher than July 2016. And the Savings Index increased one point to +5, four points higher than July 2016.

Those last two figures could make tough reading for retailers as shoppers seem set to splash out less on major purchases and will put more money in the bank, just in case the economy does tank.

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