Consumer confidence remains ‘buoyant’ but threats on the horizon

Analysts expected consumer confidence to decline after the Government triggered Article 50, beginning the Brexit process, yet in April it held up.

Consumer confidence saw a surprisingly small drop in April as the Government’s decision to trigger Article 50, starting the Brexit process, and call for a snap General Election had little impact.

The latest figures from GfK’s Consumer Confidence Index (CCI) show ovverall confidence at -7 in April, just a one point fall from March. Although four of the five confidence measures fell in April, each decline was only small.

Consumers’ perceptions of their own personal finances over the last 12 months as well as over the next 12 months both dropped by just one point; this suggests Brexit and rising food inflation are yet to be a cause for major concern among Brits.

The major purchase index, meanwhile, rose by one point to +7 in April, which shows Brits are in fact more comfortable spending big now that Article 50 has been triggered. However, Joe Staton, head of market dynamics at GfK, thinks the “surprisingly positive” results could just be the “calm before the storm.”“Although the overall index score remains in negative territory, and has dipped this month, we have not seen any evidence of the predicted post-trigger downturn, despite high levels of concern about the general economic situation of the country,” he says.

“But is this too good to be true? And is this simply the calm before the storm? It could be that pre-Brexit economic turbulence hasn’t yet battered households, but still remains on the horizon. That threat cannot be ruled out.”

Heading into June’s General Election, Staton says consumer sentiment is “surprisingly buoyant”. However, he suggests the the election could cause instability and that next month’s index might tell a different story

He concludes: “There’s certainly scope for some unpleasant surprises. Things will be clearer when the General Election result is known and when we get a better sense of the tone and direction of the Brexit negotiations.”

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