UK economy putting a ‘muzzle on consumer confidence’

Positive scores for personal finance and negative scores for the wider economy offer “no clue” as to what consumers are really thinking.

A stronger jobs market, rising real incomes, low interest rates and low levels of headline inflation helped UK consumers feel a little bit more upbeat about the UK economy in May, according to GfK’s Consumer Confidence Index, with confidence rising two points to -7.

However, the figures reveal an odd mismatch of positive scores for personal finance contrasting with very negative scores for how Brits see the wider economy – which have not entered positive territory for almost two and a half years.

Joe Staton, client strategy director at GfK, tells Marketing Week May’s figures offer no clues to which way consumers are heading.

“We are less inclined than last month to spend; but we are also less inclined than last month to save. What are consumers really thinking?” he asks.

“Negative scores on the economy are a muzzle on consumer confidence. People need to feel fired up by economic prospects before the Overall Index Score can deliver any excitement.”

The index measuring changes in personal finances over the past 12 months has increased two points in May to +1 (one point lower than this time last year), while the forecast for personal finances over the next 12 months has increased four points to +8 this month (four points higher than May 2017).

Meanwhile, the measure for the general economic situation of the country over the past 12 months has increased five points to -24 (four points lower than May 2017), while expectations for the next 12 months have increased three points to -21 (the same level as this time last year).

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