Consumers seem set on “self-imposed” austerity as their confidence in the economy and their own financial situation continues to deteriorate.
According to GfK, consumer confidence fell by two points in June to -9, marking two-and-a-half years in negative territory. And there is even more bad news for Britain’s struggling retail sector, with consumers’ propensity to make a purchase falling by a point to 0.
The economic mood in particular remains in the doldrums, with consumers view of the general economic situation over the past 12 months and over the next 12 months falling by four points to -28 and -25 respectively. This despite encouraging numbers, with the stock market testing new highs, a strong jobs market, rising real incomes and low interest rates.
That is in stark contrast to 2015, when there was a full year of positive numbers, with the trend since then “resolutely downwards” and little sign this will change in the run-up to the UK leaving the EU.
“Negative scores on the economy are a muzzle on consumer confidence,” says Joe Staton, client strategy director at GfK. “People need to feel fired up by economic prospects before the overall consumer confidence index can deliver any excitement.”
Consumers’ negative feelings towards the economy are in contrast to their feelings about their own financial situation. While these measures also fell in June, consumers are still feeling positive about their own situation over the next 12 months, with the score at 6.
“There’s an odd mismatch of positive scores for personal finance contrasting with very negative scores for how we see the wider economy,” explains Staton.