Self-imposed austerity is the story as UK consumer confidence dips again

By

Sandra Halliday

Published
Jun 29, 2018

UK consumer confidence is down in June and that’s bad news for the fashion sector with researcher GfK saying “consumers in pre-Brexit UK are less confident about the economy and seem set on self-imposed austerity.”

Its long-running Consumer Confidence Index has fallen two points for June to -9 compared to May’s -7, and significantly, all five of its measures were lower month-on-month (but not year-on-year).

That overall score of -9 was, at least, better than June 2017 when it was -10, but it’s still far from being a strong number. Meanwhile, the Personal Financial Situation index measuring changes in personal finances during the last 12 months fell one point this month to zero, again, a point higher than this time last year but not exactly impressive.

The forecast for personal finances over the next 12 months also fell two points to +6 this month from May’s +8. Despite that fall, it suggests that consumers aren’t quite so gloomy about their own futures as their current spending patterns might make them seem, especially as the measure is six points higher than June 2017.

But they feel less happy about the prospects for the UK as a whole. The measure for the General Economic Situation of the country during the last 12 months decreased four points to -28, which is three points lower than June 2017. And expectations for the next 12 months have decreased four points to -25, two points down on a year ago.

What does all this all mean in terms of spending plans? Well, GfK said that the Major Purchase Index has decreased one point this month to zero, which one point lower than both May 2018 and June 2017, so clearly any plans to splash out of major buys remain on hold. That was made even more clear by the Savings Index increasing one point to +8 in June, which is four points higher than this time last year.

GfK Client Strategy Director Joe Staton said of all this: “Consumers are yet again feeling less upbeat as is evident from the two-point drop in the Overall Index Score this month. We are reporting falls across all key measures. Scores on personal finance are down but there is a more marked deterioration in our levels of optimism about the general state of the economy, with the verdicts on the past year and the coming year each tumbling four points. 

“With Britain’s hard-pressed retail sector very much in the news, there is little comfort in the one-point drop to zero in the Major Purchase Index. Shoppers are holding on to their cash and consumers in general seem set on their path of self-imposed austerity. The Overall Index Score has now registered at zero or negative for 30 months. Contrast that with 2015 – when there was a full year of positive numbers. The trend since those 2015 figures has been resolutely downwards and it’s difficult to see the direction changing in the run-up to the UK leaving the European Union in March 2019.”