A “giant cloud of resignation” hangs over consumers as they await the outcome of Brexit, impact consumer confidence which remained negative, although stable, in February, at -13.
That means confidence was actually up by one point this month, compared to January, although it is still three points lower than February 2018, according to GfK’s consumer confidence index. Of the five metrics measured, three increased and two stayed the same in February as consumers continue to take a wait-and-see approach to the outcome of Brexit.
The measure for the general economic situation of the country during the last 12 months increased two points compared to January but is still stuck well in negative territory at -33. That is four points down compared to February 2018.
Expectations for the general economic situation over the next 12 months have also increased one point to -38, although this is still 12 points lower than February 2018.
Joe Staton, client strategy director at GfK, says the continuing depressed sentiment towards the general economic situation illustrates “the calm before the storm of post-Brexit headwinds and potential negative economic outcomes”. He questions whether consumers are perhaps on the edge of some kind of economic or livelihood precipice.
“Consumers are like markets, they respond to certainty and that’s in short supply just now,” he explains. “It is worth bearing in mind that many economic indicators – employment levels, wage growth – remain positive. But it is frankly amazing that confidence is so stoic and stable in a world of sharp political instability and fear of the unknown.”
The sentiment around personal finances during the last 12 months has stayed the same at 0 as has the index measuring personal finances during the next year which is stable at a score of one but still four points lower than in February 2018.
Staton says the reason behind the lack of movement is due to the uncertainty around Brexit which has consumers “floundering in a sea of the unknown unknowns”.
“It’s all shades of grey, grey, grey. The truth is there’s a giant grey cloud of resignation hanging over consumers – nothing will change until we get some kind of movement on Brexit, deal or no deal, bad deal or good deal. At least we’ll know where we stand,” he says.
The uncertainty means consumers now feel it is a good time to save, with this metric climbing steadily since the referendum in 2016. In February, it stood at 18, four points higher than in January and six points higher than a year ago.
Pardoxically, the major purchase index is up at well. In increased three points in February to a score of five, up three points compared to the prior month and five compared to a year previous.