Published Wednesday 6th March 2019
The latest consumer index figures by GfK report that UK consumer confidence increased in February, despite wide economic uncertainty heading into Brexit. The GfK consumer confidence index rose from a five-year low of -14 in January to -13 last month. Many analysts had expected another decrease, and the figures have been called “frankly amazing” by the research conductors.
Whilst the robust consumer confidence may provide some much-needed relief to cautious businesses, the figures remain in overall negative territory. These numbers, some suggest, “might point towards the calm before the storm” as domestic economic uncertainty continues.
How has Consumer Confidence Grown?
As previously mentioned, January’s consumer confidence index was -14, the lowest figure in over five years. The index was also at -14 in December 2018, with research indicating that the British consumer was in a “wait and see” period of decision-making. However, there were signs of improvement in January regarding people’s personal finances, and it is this factor that has led to the surprise increase during February.
According to the research by GfK, British consumers feel more positive about their finances going into 2019, whilst an increase in the Major Purchases Index indicates that UK consumers may be more willing to spend. This rise is mostly down to rises in employment levels and the average wage, which has grown at the fastest rate seen in a decade. However, whilst these research figures may sound like positives from a consumer point of view, the outlook is still unclear for businesses.
Businesses Still Proceed with Caution
As previously mentioned, there are positives to be taken from these figures, particularly the avoidance of a slide. Many analysts had expected these latest figures to mirror the behaviour seen following the EU referendum in 2016 and the beginning of the financial crisis more than a decade ago, with the index falling dramatically in both circumstances.
Despite the overall improvement, the index figure recorded in February is still in negative territory, with the annual average decreasing since its peak in early 2016. The consumer economic outlook for the next twelve months increased during February to -38, but this is still down 12 points on the score in February 2018, outlining a noticeable lack of confidence going forward. Whilst there has been a slight increase, consumers may still be waiting, particularly with the economic changes that could occur as a result of Brexit.
Brexit Uncertainty Increasing
As the current Brexit outlook stands, the UK is still set to leave the European Union on March 29th, regardless of whether a deal is agreed. However, where businesses will stand next month regarding issues such as import/export tariffs and the broader economic picture remains to be seen.
The researchers behind this monthly study appear to indicate, at this moment, that February is likely a positive blip more than a long-term change. As with many economic forecasts in the UK, a lack of certainty going forward is still causing widespread concern, and the questions regarding Brexit continue to mount up. Despite being only a few weeks away, companies cannot know for sure whether they will be operating in or outside EU markets in April, or whether the exit process will be delayed altogether. Until a Brexit agreement that offers long-term stability can be agreed and implemented, major businesses will still take a safety-first approach to ensure they are in a position to combat all possible outcomes.
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