Consumer confidence weakest since Brexit vote

Business & Economy 29 May 2017
Consumer confidence weakest since Brexit vote

Brexit: Consumer confidence at its lowest level since the EU referendum

Slowing GDP figures may start to translate to people's everyday lives, say analysts, but there is optimism about property prices.

Image: Consumer confidence is 'heading gently downwards', says YouGov

Consumer confidence has slipped to its lowest level since the month after the UK voted for Brexit, according to a survey.

It fell 0.2 points from the previous month to 107.9 – its lowest since July 2016.

Although a score over 100 indicates a positive outlook, the index – produced from YouGov and the Centre for Economics and Business Research (Cebr) data – has yet to recover to pre-referendum levels.

Expectations for household finances over the next 12 months also fell, while workers' perception of job security also dropped to its lowest level since April 2013.

However, the survey found homeowners had become slightly more optimistic about property prices.

The findings come as official figures this week showed the economy grew by just 0.2% in the first quarter of 2017, lower than an initial estimate of 0.3%.

It follows growth of 0.7% in the fourth quarter of 2016 and means that the UK's growth slowdown – partly driven by rising inflation – is worse than first thought.

The Office for National Statistics pointed to declines for consumer-facing industries such as retail and hotels and a slowdown in household spending, as well as weak growth for construction and manufacturing.

Britain's economy performed better than expected in the wake of the Brexit vote, but accelerating price rises – partly driven by the sharp fall in the pound since the vote – appear to be taking their toll.

Latest official data showed that in real terms – that is, taking into account inflation – wages fell by 0.2% in the first three months of 2017, the first time there has been a decline for two and a half years.

Nina Skero, head of macroeconomics at the Cebr, said of the survey: "Consumer confidence continues to decline and every month it is getting closer to the level it was at immediately after the EU referendum.

"The most concerning aspect in the numbers is the continuing decline in people's household financial situations.

"Both forward and backward-looking measures are at their lowest level for a number of years and it doesn't take much for a tightening of purse strings to lead to a slowdown in the economy."

Stephen Harmston, head of YouGov Reports, added: "After several jolts over the past year, consumer confidence is now treading a straighter path, albeit one that heads gently downwards.

"It looks like this may be the point where the slowing GDP figures start to translate to people's everyday lives.

"The figures indicate that they are starting to experience a downturn, as shown by the fall in both household finances and job security over the past 30 days.

"Property prices remain resolute, but they are currently the main thing giving consumers confidence."

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