Consumers 'losing their nerve' as confidence dips - GfK

Consumer sentiment dipped further in November as households worried about their personal finances, a widely followed survey showed.

GfK's consumer confidence index fell by two points to -33 showing morale taking a further drop after the six-point decline in October. Of the five measures recorded, three fell in November and two were unchanged.

The biggest declines were in measures of personal financial security. The reading for personal financial situation over the past 12 months fell seven points to -16 and the outlook dropped by five points to -5, suggesting consumers are increasingly concerned about the coming year.

GfK's client strategy director Joe Staton said: "People are clearly losing their nerve regarding their personal finances with scores for the last 12 months and the year to come sharply down. This will deal a blow to any future rebound because bullish consumer spending fuels the UK economy and low confidence is the enemy of recovery.”

The survey was carried out with England in a second Covid-19 lockdown and the threat of unemployment looming over the economy. The government is considering relaxing rules over Christmas but with a new lockdown in the new year. It is also considering tougher tiered restrictions for when the lockdown ends.

Positive news about vaccines has brought hope that life could start to return to normal in 2021 but economists have warned that the economy could be permanently damaged by the pandemic. GfK found views on the UK economy unchanged at -67 for the past 12 months and -50 for the coming year compared with -34 for both indexes a year earlier.

"Confidence has been unsurprisingly knocked by the return of a national lockdown, the threat of unemployment," Shore Capital retail analyst Katie Cousins said. "The news of successful vaccines is likely to bring a new level of hope to consumers and business owners. However, we believe the country has suffered deep Covid-19 scars and anticipate that the impact will be felt for months to come."