United Kingdom: Consumers grow gloomier in June in the aftermath of the general election
June 30, 2017
The GfK NOP consumer confidence indicator dived from minus 5 points in May to minus 10 points in June, a mere two points above last year’s post-referendum score of minus 12. The index hence moved further into negative territory, where it has been since April of last year, highlighting that consumers are broadly pessimistic.
June’s figure reflects more pessimistic sentiment regarding the personal financial situation of consumers over the last 12 months and for the year ahead. Consumers also grew more downbeat concerning the global economic situation of the country over the last 12 months and for the next year, and grew markedly less willing to make major household purchases. The outcome of the general election and the ensuing political uncertainty, particularly surrounding the type of Brexit the government will pursue, seems to have given consumers a significant jolt. This was likely reinforced by inflation which continued to rise unabated in May, eating away at households’ disposable income.
According to Joe Staton, Head of Market Dynamics at GfK, “The scores on the general economic situation looking forward and back 12 months are now particularly weak. All this concern will worry the UK’s retailers, with this month’s plunge in the Major Purchase Index (down eight points) reflecting our increased caution over non-food spending and our softening appetite for debt. Strong consumer spending has propped up the economy since last June but now the twin pressures of higher prices and sluggish wage growth are squeezing household finances and adding to widespread fears of a Brexit-induced economic slowdown.”
Author: Oliver Reynolds, Economist