UK consumer confidence hits low point as Brexit shambles continues

By

Sandra Halliday

Published
Dec 21, 2018

This will probably surprise no one who has been following the UK retail scene in the last year, but consumer confidence has reached a historic low. The latest monthly report from GfK said that confidence is down again in December, ending the year on a five-year low.

The consumer confidence index, which is prepared for the European commission, showed that British confidence fell by a single point both year-on-year and month-on-month to -14 in December, proving that consumers retain their overall gloomy outlook.

And most of the measures that the index includes were down. Interestingly though, the two measures that rose showed that consumers remain more upbeat about their personal situations than that of the country as a whole, and that there’s still some willingness to spend.

The major purchase index rose six points year-on-year and five points month-on-month to +5, suggesting that consumers haven't altogether abandoned the idea of spending on items they really want or need.

The other measure that rose was the personal financial situation index for the last 12 months, which edged up to reach -1. But the fact that the personal financial situation index for the next 12 months was down four points month-on-month and three points year-on-year to -1 underlines consumers’ gloom in the face of a shambolic Brexit.

Their view of the general economic situation over the last 12 months also illustrates this with a reading down to -31, while their opinion is even more bleak on the next 12 months as the reading here has fallen to -38.

Joe Staton, Client Strategy Director at GfK, said: “UK consumers are ending 2018 on a pessimistic note with Christmas cheer in short supply. We are five points lower than this year’s opening score in January and were no higher than -7 this summer. This represents a more than five-year low for the index which has bumped along in negative territory since 2016. The steep drop of six points for the outlook on the general economy in the coming year is the most telling data point this month with consumers clearly casting a vote of no-confidence in our immediate economic future.”

He added that the uptick in the major purchases measure “might be no more than a last festive hurrah for retailers, the only sliver of comfort and joy amidst the gloom.”

And Brexit is to blame. “In the face of ever-rising costs, and the threat of higher inflation combined with uncertainty around the outcome of the Brexit negotiations, it’s no surprise that consumers are in a chilly mood of despondency and putting on a glum face when they look at the prospects for 2019,” Staton said. “Sad to say that an unhappy and uncertain New Year beckons despite good intentions from all points on the economic and political spectrum.”