Economists and business gurus alike concede that 2016 has been a volatile year for the UK, from the uncertainty following the Brexit vote to fears over the impact of the Trump presidency on transatlantic business. Consumer confidence has seen a minor increase of one point this month, however, according to the GfK Consumer Confidence Index, suggesting a rocky, but potentially promising start to 2017.
In what Joe Staton, GfK’s head of market dynamics calls a turbulent year for confidence in the UK, he believes consumers reacted as expected to the dramatic economic and political turmoil of 2016. “After a positive start to the year (January 2016, +4) the index plunged rapidly in post-Brexit Britain (July 2016, -12) with the recovery to September then evaporating by year end to limp home at -7 for December. While consumers remain relatively confident about their personal financial situation, confidence in the general economic situation for the UK has collapsed in the face of uncertainty about the future both at home and abroad,” he said.
Despite everything, consumer resilience is shown by strength in the major purchase index, the ‘now is a good time to buy’ mantra being reflected in strong retail sales growth, Staton added. “Looking ahead to 2017, against a backdrop of Brexit negotiations, the decline in the value of sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress (Sturm und Drang) of the year to come.”
Consumer confidence measures
The Overall Index Score has increased one point this month to -7. Two of the five measures saw increases in December with the remaining three measures decreasing.
Personal financial situation
The index measuring changes in personal finances during the last 12 months has decreased by one point this month to 0; this is three points lower than the same point last year.
The forecast for personal finances over the next 12 months has increased by one point this month to +3; this is six points lower than December 2015.
General economic situation
This measure during the last 12 months has decreased one point this month to -26; this is 21 points lower than December 2015.
Expectations for the next 12 months have decreased one point to -23 this month; this is 17 points lower than December 2015.
Major purchase index
This has increased seven points this month to +12; this is five points higher than this time last year.
This measure has increased six points to -5; this is five points lower than December 2015.
Published at Thu, 22 Dec 2016 09:39:19 +0000