Brexit causes dramatic fall in consumer confidence

Consumer confidence has seen its sharpest month-on-month drop in 26 years as a result of Brexit, new data has revealed.

Research carried out by GfK on behalf of the European Commission found that its Consumer Confidence Index dropped 11 points in July, from -1 to -12. This is further three-point drop from the -9 recorded in early July.

The survey also revealed that the measure for the general economic situation in the UK over the past 12 months had dropped 12 points to -25, which is 24 points lower than July last year.

Future expectations for the economy were also low, decreasing 19 points to -33 in July, 32 points lower than the same period last year.

The Major Purchase Index, which measures the likelihood of consumers purchasing items such as furniture and electrical goods, decreased by 11 points to -2, a 13 point drop on July 2015.

Joe Staton, head of market dynamics at GfK, said: “Consumers in post-Brexit Britain are reporting higher levels of concern this month. We’ve seen a very significant drop in confidence, as is clear from the fall in each of our key measures, with the biggest decrease occurring in the outlook for the general economic situation in the next 12 months (-19 points). Although the rate of decline is slower than reported in the aftermath of the vote to leave the EU, consumers in the UK were also less optimistic about the state of their personal financial situation going forward (-9 points).

“However, the index continues to remain at a relatively elevated level by historic standards. Its future trajectory depends on whether we enter a new period of damaging economic uncertainty or restore confidence by embracing a positive stance on negotiating a new deal for the UK.”