Consumer Confidence Slumps After Brexit Vote, Economic Shrinking Is Soon Expected By Economists
British consumer confidence has dipped as early as February reports were revealed today. The rising inflation that sprung from the Brexit vote has made households cautious about the possible outcome their finances can huddle. Surveys are conducted left and right as consumer confidence plummets continuously.
The two separate surveys conducted by market research firms GFK and pollster YouGov has led to the conclusion of the current pressing matter; the financial pressure on households had skyrocketed signaling the same bitter future. The current financial concern has racked up the declining consumer spending, which was one of the biggest players in driving the Britain’s economy for the over the previous years.
Confidence Index Drops
GFK Consumer Confidence Index reported a huge -6 drop, a consistent decline in January’s -5. Last June’s drop is one of the biggest drops the Britain experienced for over two decades of balance recorded in the wake of last June’s EU referendum, resulting in a -12 dip creating fear of another recession for the economy. Also, the strong recognition of job security lessening drags the consumer confidence swirling down, making the outlook for household finances in the coming year also deteriorated.
Another survey by YouGov and the Centre for Economics and Business Research (Cebr) think-thank, proposed a similar image with both headlines covering consumer confidence slipping to somewhere about 109.4 from 109.6 in January, keeping it well below its former levels before the Brexit vote. In a similar statement, Scott Corfe, director of Cebr noted,
With inflation set to rise over the coming months and significant amounts of economic uncertainty, consumer confidence will struggle to return to the higher levels seen a year ago.
Although the balance crept fast, but not fast enough, to a -1 in September as confidence bounces back. Even though the consumer seems to be thriving, the indicator has fallen down gradually ever since October.
According to the head of the market dynamic over at GFK, Joe Staton,
We haven’t had positive scores for expectations about the general economy since early 2015. With the score for major purchases and savings diving lower too, a rational person would have to say consumers are in a gloomy mood. Any momentum behind the post-Brexit, debt-fuelled, consumer spending boom now appears to be softening. We haven’t had positive scores for expectations about the general economy since early 2015. With the score for major purchases and savings diving lower too, a rational person would have to say consumers are in a gloomy mood.
Polls And Bank’s forecast
News and individual business entities have also conducted several polls. Both poll results and several economists pointed that the consumer price inflation will peak around 3% towards the end of the year, from January’s 1.8%. According to the Bank of England, household incomes will stop from growing in inflation-adjusted terms coming somewhere in the middle of the year.
The bank also mentioned that it will keep a keen eye on the extent to which households will seek to bridge the gap by borrowing more. In a separate study, the Lloyds’ Bank conducted last January which was published last Tuesday; the study shows a “significant” decline in the number of consumers’ losing faith that they won’t have any money left over after paying household bills.
Most analysts warn that if the consumer morale continues to dip could potentially lead to an overall economic slowdown for the whole year. Consumer spending is and will be the main driver that provides a change for the UK economy to grow. While economists, on the other hand, are hesitant that the Britain household is willing to sustain its current spending state.