UK Consumer Confidence Slightly Recovers in September but Remains Close to Lows After Brexit Vote

According to the newest snapshot of UK sentiment, consumer confidence slightly picked up. However, it remains close to the lows hit in the wake of June 2016’s Brexit vote in September.

The headline index of GfK rose 1 point to -9 in the month.

As confidence was hit by the shock result, it had decreased sharply to -12 in the month after the referendum.

The index recovered rapidly. However, it has been on a broadly declining trend since September last year.

GfK reported that there was a decrease in peoples’ perception of their personal financial situation over 2018.

The data somewhat conflicts with the CBI’s newest Distributive Trades Survey from earlier this week that revealed retail sales are hitting a two-year high in September.

In the wider economy, retail sales are considered as a bellwether for momentum since they account for around 30% of UK household consumption – which in turn accounts for around 60% of the GDP.

However, GfK’s Joe Staton emphasised the resilience of UK shoppers.

“Consumers are still spending out there, and have repeatedly defied predictions of a downturn since last year’s Brexit vote, partly by running down savings and/or borrowing more,” said Staton.

“Indeed, the major purchase indicator has crept up the second month in a row, and the savings index has sagged. It’s live now, pay later. This defiant consumer mood seems to be the ‘new normal’. But how long can it last?”

On Friday, a separate index from Lloyds Bank that was released revealed that overall business confidence increased by 6 points to 23% in September.

Economic optimism among firms rose by 7 points to 12%. However, that was still the second lowest level of this year.