UK consumer confidence stays low, consumer spending to suffer - report
May 19, 2020
UK consumers are feeling battered and lack confidence as their incomes drop at a faster pace than ever due to the coronavirus pandemic. A new survey from IHS Markit comes as millions of job losses are expected in 2020, with many more people remaining on reduced pay or temporary leave for some time.
It also means that while non-essential stores are due to open again soon, consumer interest in buying non-essential items could be suppressed for quite a few months. While in some ways this will prevent stores from being overwhelmed as they take tentative steps towards getting back to normal, it will be unsupportable for many of them longer term, with more business failures expected as a result.
The new Household Finance Survey showed household income is falling faster than at any time since the survey began in February 2009. Britons are generally pessimistic about their job prospects and those working in media, culture and entertainment are suffering the most as their workload falls off more sharply than other sectors.
The confidence level is at 37.8 for May, which admittedly is better than the 34.9 seen in April. But with the neutral benchmark being 50 (and anything above that indicating confidence overall), it's clear consumer sentiment is in a bad way.
IHS Markit economist Joe Haynes said that with so many survey respondents worried about their job security, there could be “a significant impact on consumer spending if the negative economic impact of the pandemic is protracted.”
And those job security concerns seem to be justified with more than 20% of employers planning to make redundancies during the next quarter. That’s according to a report from the Chartered Institute of Personnel and Development and recruitment specialist Adecco. And those that aren't planning layoffs have frozen pay rises.
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