Mood among UK consumers and businesses cools in February: GfK

The mood among British consumers and businesses worsened slightly in February, according to surveys on Wednesday that suggested the economy remains on a steady but slow course ahead of Brexit.

Britain’s headline gauge of consumer confidence, compiled by market research firm GfK for the European Commission, slipped to -10 from -9 in January, as expected in a Reuters poll of economists, and not far from December’s four-year of low -13.

Lloyds Bank’s business confidence barometer eased to 33 percent from January’s nine-month high of 35 percent.

The surveys suggested Britain’s sluggish economic growth at the end of 2017 - despite a much stronger global pick-up - continued in early 2018 with little more than a year to go until Britain leaves the European Union.

Economists polled by Reuters expect Britain, Japan and Italy risk getting the title of the slowest-growing Group of Seven economy in 2018.

GfK said consumers’ expectations for their financial and economic well-being edged lower in February, hit by worry about slow wage growth, high inflation and the combination of increase local taxes and higher official interest rates.

Another consumer confidence survey - by polling firm YouGov and the CEBR think tank - rose in February but remained below levels seen before a sharp drop in November.

The YouGov/CEBR survey is partly based on perceptions of house prices and job security, unlike the GfK survey.

The Lloyds business confidence survey of 1,200 companies showed businesses had become more upbeat about prospects for the economy, although they were less confident about their own prospects.

Lloyds said there was little sign that companies were planning a significant pick-up in pay growth. Bank of England officials have said they see early signs that wages are starting to rise more quickly.

Also on Wednesday, the British Retail Consortium said shop prices fell 0.8 percent in the year to January, a steeper decline than the 0.5 percent drop in December.

“This is a further sign that we have passed the peak of the upward pressure on inflation caused by the fall in the pound in June 2016,” said BRC chief executive Helen Dickinson.