Brexit drives down late summer UK consumer confidence as no-deal gets closer

GfK’s long-running consumer confidence survey showed a fall in sentiment during August, which is perhaps no surprise given the increasing possibility of a no-deal Brexit as the countdown clock runs down.The overall Index fell to -14 this month and to put that in context, it was only -7 exactly a year ago.

The different metrics GfK uses to reach this point all looked bleak. The index measuring changes in personal finances during the last 12 months fell by two points month-on-month to -1 and by five points year-on-year.The forecast for personal finances in the 12 months ahead dropped five points compared to July to hit +2, and it was six points lower than a year ago.The measure for the general economic situation of the country during the last 12 months fell two points on the month to a very low -34, which was also eight points down on a year ago.And expectations for the general economic situation over the next 12 months dropped six points to an even worse -38 compared to July, falling 12 points year-on-year.Importantly too, the major purchase index was down three points on the month at only +1, which is well below the +6 of a year ago.Joe Staton, Client Strategy director at GfK, highlighted the impact Brexit is having: “Until Brexit leaves the front pages – whenever that will be – consumers can be forgiven for feeling nervous not just about the wider economy but also about their financial situation.“That’s an important distinction because a significant development in August is the sudden drop in views on personal finances ‘over the next 12 months’ after the encouraging jump in this measure last month. For a long time, the downward momentum in the Overall Index Score has been associated with our views on economy.”
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