Brexit concerns fail to curb consumer spending

Despite consumers’ concerns about the impact a possible Brexit could have on the economy, this has not curbed their spending, according to the latest consumer confidence figures.

GfK’s monthly consumer confidence index found that people’s propensity to make a big purchase increased by four points to +9 in May compared to the previous month and by seven points from a year ago. This despite the fact that retailers including Next and Marks & Spencer have warned over consumer spending due to economic uncertainty.

Consumers’ feelings about their own financial situation are also stable, with the index measuring changes in personal finances over the last 12 months increasing by one point from April to +4 and by five points since May last year. The forecast for their personal finances for the next 12 months has remained steady at +7 compared to the previous month as it up by four points compared to a year ago.

consumer confidence may 2016

Consumer spending is also helping to drive economy growth. According to the latest statistics from the Office of National Statistics, consumer spending growth was up by 0.7% in the first quarter. That outpaced growth in the wider economy, which expanded by just 0.4% as business investment fell and trade slowed.

Joe Staton, head of market dynamics at Gfk, told Marketing Week: “[Consumers are] feeling good about their personal finances but not happy about the wider economy.”

That can be seen in perceptions of the general economic situation, which have slumped compared to a year ago. Consumer confidence in the general economic situation over the past 12 months is down by 14 points compared to May 2015 and sits at just -13. It is a similar story when looking over the next 12 months with confidence at -13, a fall of 13 points compared to a year ago.

Read more: What would Brexit mean for marketers?

And Staton believes the EU Referendum is mostly to blame as people get the “referendum blues”.

“Nobody knows what to make of the contrasting views on Brexit – from one side we hear unbounded optimism about life free of EU shackles and from the other we have the contrast of gloomy end-of-the-world predictions of the impact of going it alone. People want certainty and in the absence of that we all feel uneasy. That’s what’s suppressing any sense that the wider economy is in good shape,” he explained.

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