GfK UK consumer confidence sinks, Brexit is "black cloud"
The UK’s already-fragile consumer confidence fractured further in October with the latest GfK survey showing it’s dangerously close to breaking point and offering no encouragement for the Christmas shopping season.
Overall consumer confidence has dropped two points compared to September and four points year-on-year to hit -14 as all five measures that make up the final figure are down.
Consumers are generally gloomy about the wider economy with October’s reading for the 12 months ahead being -37, down two points from September and nine points from October 2018. Their view of the economy in the past 12 months is at -33, again lower than both the previous month and the previous year.
That said, they still feel better about their own personal situations. Their view of the next 12 months sees a reading of +1, which is lower than September’s and October 2018’s +4. And their view of the last 12 months is at +1 too, down on the +2 from September but level with the same month last year.
The major purchase index also looks weak, despite being just-about-positive. It’s at +1, which is not only lower than a month earlier (+3) and a year earlier (+4), but is worryingly low given that we’re entering the year’s biggest shopping season.
Joe Staton, Client Strategy Director at GfK, knows where to put the blame: Brexit uncertainty. "The ongoing machinations in Westminster appear to be impacting how we view our personal financial situation for the coming year with a notable fall of -3 in this measure in October," he said. "Is this an early sign of long-running weak economic confidence spreading to the way we view money matters? This deterioration in sentiment regarding our personal financial affairs is worrying as strong consumer spending has been the main driver of economic growth since the referendum in 2016 against a backdrop of low inflation, low interest rates, low wage growth and high employment.”
He thinks the reduced confidence in personal finances for the year ahead might pose a risk to the wider economy with “Brexit’s continuing uncertainty and the spectre of a general election not helpful.”
He added that “people can only feel confident if they believe the external environment is stable, yet consumers are witnessing too many Brexit shifts and surprises, too many Brexit timelines and counter proposals to justify any longer-term confidence. The big black Brexit cloud is refusing to shift.”
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