UK consumer sentiment improves but stays weak

British consumers this month were the cheeriest since September last year, reporting an improvement in their personal finances and a less gloomy view of the year ahead, according to a monthly survey by market researchers GfK.

Solid demand from British households has kept the economy ticking over during a period when many businesses have called a halt to major investment until the terms of Britain’s departure from the European Union become clearer.

The GfK consumer sentiment index rose to -10 in May from April’s increase of -13, its highest since September 2018 and beating all forecasts in a Reuters poll of economist.

However, GfK said it expected further gains to be limited while it remained uncertain how Britain would leave the European Union on the newly set Brexit date of Oct. 31.

“Consumers will need to be convinced in heart, head and wallet that Brexit’s murkiness has finally come to an end,” GfK executive Joe Staton said.

GfK’s data showed a big split between households’ relatively upbeat assessment of their own financial situation - reflecting high levels of employment and rising wage growth - and a far bleaker assessment of the broader prospects for the economy.

Separately, figures from Lloyds Bank showed that last month’s news of a six-month delay to Brexit had only offered a fleeting boost to business morale.

Lloyds’s monthly business barometer sank back to +10 in May from +14 in April, its first fall in three months.

“A slight dip in confidence this month appears largely to reflect companies’ assessment of their own trading prospects for the coming year, and the anticipated impact of the UK leaving the EU,” Lloyds Bank economist Hann-Ju Ho said.