UK consumer confidence dips again as Brexit talks stall

By

Sandra Halliday

Published
Sep 28, 2018

British consumers continue to be cautious as the news on Brexit shows a no-deal EU exit could happen in a few months’ time, the latest GfK UK consumer confidence index showed on Friday.

Coming just a day after US consumer confidence was shown to be running at a very high level, it underlined the unique challenges facing the UK economy and the fashion retail sector there.

Based on a survey of over 2,000 people in the days before Theresa May’s Brexit proposal was rejected by EU leaders, GfK’s headline index balance dropped by two points to -9 in September compared to August’s already-weak -7.

Confidence has remained subdued since 2016, the year of the Brexit vote, with the reading being zero or less since then. However, it has stayed well above the -39 it reached a decade ago when the world was going through its last big economic crisis. And it remains higher than December 2016’s -16 reading.

Looking at the detail of the latest month’s index, confidence in the general economic situation of the country over the last 12 months fell two points compared to August's -28, the same level it was at a year ago. And expectations for year ahead fell one point to -27, three points down on last year.

Consumers seem to feel better about their own personal economic prospects and while confidence in their personal finances for the last year fell three points, at least it stayed above zero at +1, two points higher than a year ago. And the view of personal finances for the next year also dropped three points to +5.

Consumers still seem prepared to make big purchases too, with the major purchase index at +6, which was up from the +1 of a year ago.

But GfK’s strategy director Joe Staton said the Brexit talks are having a direct effect on the way people feel. There are fewer than 200 days until Brexit arrangements in some shape or fashion take effect. The clock is ticking down, and in September the consumer mood dropped a couple of notches,” he said.

He added: “The danger is that consumers might capitulate on how they feel about their personal finances. If that happens, we’ll see very sharp drops indeed in the overall index score in the months up to March 2019. Will the coming six months see the consumer mood turn significantly more fragile? Or do consumers think Brexit will ultimately be positive?”