The news has been dominated recently by Brexit and headlines warning of recession and economic struggles, so it is perhaps no wonder that consumer confidence has hit its lowest point since January 2018.
Gfk Consumer Confidence Index
The Gfk Consumer Confidence Index is a measure of consumer confidence levels in the UK. Readings above zero indicate consumer optimism, whereas readings below zero indicate consumer pessimism. Readings stronger than the forecast are generally supportive for the GBP, while weaker readings than forecast are negative for the GBP.
The overall score of -14 dropped three points from the previous month and is seven points lower than the overall score was in August 2018. There is concern regarding the general economic situation in the next year, illustrated by a drop of 6 points from last month to -38, compared to -26 in August 2018.
Despite shoppers feeling earlier in the year that Brexit had not affected spending habits, the ongoing uncertainty seems to have caused concern as confidence ratings drop. Since the referendum in 2016, there has been uncertainty over exactly how we will leave the EU, under what terms and when and how it will affect the economy both in the short term and long term.
The Remain side have predicted an economic downturn and warned about effects on industries, jobs, housing and just about every area of life. Brexiteers dismiss this as ‘Project Fear’. The fact that the situation has gone on for so long without any clear answers has taken its toll on the British public as consumers are now reluctant to make any major financial decisions and feel less likely to go out and spend their money.
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Joe Stanton, GfK’s client strategy director stated “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.” Although we are not yet seeing the headline score plummet to those seen in the 2008/2009 financial crisis, this is a trend we need to keep an eye on.