Consumer confidence is “stuck in the doldrums” as uncertainty over the trigger of Article 50 and Brexit negotiations leave consumers “holding their breath”.
The latest figures from GfK’s consumer confidence index (CCI) show overall confidence at -6 in March, the same rate as in February. The major purchase index crept up by one point in March to 6, but is still five points below where it was a year ago.
Joe Staton, head of market dynamics at GfK, does not expect any big uptick in consumer confidence over the next few months either as the UK begins difficult negotiations with the EU and Scotland continues to push for another independence referendum.
“There’s definitely a sense in which everybody was holding their breath until the first shots were fired in the Brexit negotiations in the form of this week’s Article 50 letter. It’s difficult to see how the future discussions will inspire confidence because they will be characterised by robust negotiating positions at least for the opening phases,” he explains.
“Add to that the overlay of Scotland’s determination to secure another independence referendum, the clear evidence of price inflation and the prospect of interest rate rises and it’s unlikely consumers will have a sense of ‘all is well’. Any upsurge in consumer confidence in coming months will be a surprise.”
Three of the other four measure in the CCI stayed the same in March. However, consumer perceptions of their personal financial situation over the last 12 months improved by one point; perhaps a sign that people have found themselves in a better position than they expected to after the vote to leave the EU.
Household spending has been a big driver of economic growth and remains critical to future economic prospects. Staton concludes: “If we carry on shopping, as seek by the uptick in the major purchase index, then forecasts for a post-Trigger/pre-Brexit slowdown could be proved wrong.”