UK consumer confidence decreases again

Source: GfK Consumer Confidence Barometer on behalf of the European Commission (October 2019)

GfK is asking today: does reduced confidence in personal finances for the year ahead pose a risk to the wider economy?

The company’s long-running Consumer Confidence Index decreased two points to -14 this month, which is a decline from September but level with August.

All five measures decreased this month, including Personal Financial Situation, which decreased by one point this month to +1 – the same level as October 2018.

The measure for the General Economic Situation of the country during the last 12 months has decreased one point this month to -33; this is five points lower than in October 2018.

Expectations for the general economic situation over the next 12 months have decreased two points to -37, nine points lower than October 2018.

Joe Staton, Client Strategy Director at GfK, commented: “The ongoing machinations in Westminster appear to be impacting how we view our personal financial situation for the coming year with a notable fall of -3 in this measure in October. Is this an early sign of long-running weak economic confidence spreading to the way we view money matters?

“This deterioration in sentiment regarding our personal financial affairs is worrying as strong consumer spending has been the main driver of economic growth since the Referendum in 2016 against a backdrop of low inflation, low interest rates, low wage growth and high employment.

“Does reduced confidence in personal finances for the year ahead pose a risk to the wider economy? Nobody wants to see consumer spending reduce and let’s hope it doesn’t happen. But Brexit’s continuing uncertainty and the spectre of a general election is not helpful. People can only feel confident if they believe the external environment is stable, yet consumers are witnessing too many Brexit shifts and surprises, too many Brexit timelines and counter proposals to justify any longer-term confidence. The big black Brexit cloud is refusing to shift.”