UK consumer sentiment drops to six-year low amid Brexit woes - GfK

UK consumer confidence deteriorated to a six-year low in August as concerns about Brexit took their toll, according to a survey released earlier.

GfK’s consumer confidence index fell to -14 this month from -11 in July, marking a six-year low but above analysts’ expectations for a reading of -12.

The index tracking people’s financial situation over the last 12 months fell to -1 from 1 in July, while the index tracking their situation over the next 12 months declined to 2 from 7.

The gauge tracking the general economic situation over the next 12 months came in at -38 in August from -32 the month before.

Joe Staton, client strategy director at GfK, said: "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. But reduced confidence is now affecting how we see our personal finances. If there is a continuation of that dip in our feelings about our ‘future wallets’, we’d quickly see a headline score (the average of our five sub-measures) crash to a level that approaches the worrying figures seen in the worst days of the 2008/2009 financial crisis. We are not there yet, and we may not necessarily get there, but it’s a trend we need to watch carefully."

Shore Capital said: "It appears that Pre-Brexit, confidence has been struggling in August, political uncertainty continues to bring worry and behavioural caution, rightly so in our view, from both an economic and a consumer perspective.

"Our expectation remains that there will be no significant change in consumer sentiment until there is more certainty about the UK’s exit from the EU, therefore we do not anticipate any great upside in consumer confidence until at least September when hopefully further news will appear, however if not, the index could continue its depressed trend."