Consumer confidence drops again as ‘world turned upside down’

Despite a slight upturn in confidence last month, the latest lockdown and increased restrictions have put a serious dent in any hopes for a more optimistic outlook going into 2021.

ConsumerConfidenceCovidWith the UK now in its third lockdown, consumer confidence has again taken a hit.

GfK’s latest Consumer Confidence Barometer shows overall consumer confidence dropped by two points to -28 in January. This follows a brief reprise in December, when news of the nationwide vaccine rollout triggered a seven-point increase and a rise across all five confidence measures.

Despite hopes, both within the industry and among consumers, that an end to the pandemic was in sight, the barometer suggests the general economic outlook is fairly bleak.

The measure for the general economic situation of the country during the past 12 months is down two points to -67, 39 points lower than the same time last year. People feel less confident in the economy over the next year too, with the score dropping nine points to -44, the biggest fall this month.

GfK’s client strategy director Joe Staton believes marketers will be worrying once again about the effects of a prolonged lockdown. “Few organisations will have done as well as they would expect out of Christmas and the traditionally quiet month of January could be quieter than ever before. It’s like a world turned upside down,” he tells Marketing Week.

Staton also points to the figures around personal financial situations over the next year. Uncertainty about employment and the general pessimistic outlook means the index measuring changes in personal finances is up by just one point to -8, nine points lower than it was in January 2020.

The forecast for personal finances over the next 12 months is down one point this month at 2, four points lower than it was in January 2020.

“There are many consumers out there who will be worried about the future,” adds Staton.

That’s also reflected in the major purchase index, a key indicator of intention to spend on consumer goods over the coming year. The January figure is down by two points to -24, 25 points lower than at the same time in 2020.

To add to the gloom, the savings index is up just one point to 18, 2 points lower than last January. However, Staton is determined to stay optimistic and believes the outlook could quickly change once restrictions begin to lift again.

“All we can pin our hopes on is that people everywhere are champing at the bit for some normality,” he says.

“The pent-up demand for planning a holiday, spending our hard-earned cash on our homes, buying a car or simply going shopping must be immense.”