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UK consumer confidence is down, but worse is to come says GfK

Published
Mar 31, 2020
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It may come as no surprise, but UK consumer confidence has fallen in the latest month with the coronavirus lockdown also forecast to create a further slide in the way consumers feel.


UK consumers are growing increasingly downbeat


What’s perhaps more surprising is that confidence has only decreased by two points to reach -9 for March. In fact, one of the five measures that researcher GfK uses for its long-running survey actually increased, while another stayed the same, although three decreased.

The fact that the index didn't drop by a larger amount could be due to the timing of the survey as it came just before the lockdown, when people were feeling nervous about coronavirus, but their daily lives were still carrying on almost as normal.

As mentioned, the overall index score was down two points, compared to February. And looked at year-on-year, it was actually up from the -13 it recorded in March 2019. This highlights just how low UK consumer confidence has been for some time.

The fact that it isn't plummeting at the moment may be seen as some small comfort, although it can just as easily be taken as an explanation of why so many fashion retail businesses are in trouble at the moment with consumer sentiment having been weak for several years. These businesses have been battered during those years as cautious consumers have reined-in their spending in the wake of the uncertainty for the economy around the Brexit vote.

So what more did GfK's latest survey show us? The measure looking at people’s personal financial situations over the last 12 months actually managed to rise three points to +2 compared to February and rose two points compared to March last year. But looking at the same measure for the 12 months ahead, it fell three points month-on-month to reach +3, although it was up one point compared to a year ago.

As is usual, consumers seem to feel more confident about their individual situations than about the overall economy. Looking at how they view the general economic situation over the last 12 months, month-on-month the measure was flat at -23 and year-on-year it actually rose. March 2019 had been -33. They seem to be less confident about the situation in the 12 months ahead and this measure fell by six points month-on-month to -27, but once again this was better than the -36 of a year ago.

And what about the big measure that this survey offers up, the major purchase index? Well, that was down eight points month-on-month to hit -2, and was also down from the +1 of a year ago.

It's interesting too that the savings index (which isn't included as part of the overall index score) also plunged. It dropped 10 points compared to February and a year ago to reach +10. This is a strong illustration of how consumers are having to dip into their savings at the moment and are less likely to be adding to those savings, suggesting that even when the coronavirus pandemic is over, those consumers could be tightening their belts in order to increase their savings buffer to a pre-pandemic level. 

Joe Staton, Client Strategy Director at GfK, said: “Against the threat of a dramatic slowdown in the UK economy due to the spread of Covid-19, the Consumer Confidence Barometer has weakened. Importantly, this research was carried out during the first two-weeks of March, when the coronavirus was headline news but not impacting day-to-day lives of people across all UK nations to the degree we see today. After a run of increasingly positive numbers since last December, we’re now seeing very clear disruption.

"There’s a six-point drop in perceptions of the economy in the coming year, although the view on the next 12 months for personal finances has recorded a softer decrease of three points. The steep eight-point fall in the major purchase index is worrying news for retailers across the land. While we have a long way to drop before we match the devastating numbers seen in July 2008 when the overall score crashed to -39 points, lockdown Britain can only expect further deterioration.”

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