Consumer confidence: The Brexit effect

After months of Brexit uncertainty, experts have warned that consumer confidence in the UK has taken a massive hit, and has now reached its lowest point in five years. According to the GFK index, which is European Commission uses as a measure of consumer confidence, in the UK the level of confidence fell for the last three months, as shoppers fear for the stability of the UK economy in the future.

A number of major British chains, including Boots, have seen a decline in sales in the last three months. The owner of the chain blames this on the”weak retail environment”, which has been intensifying as Brexit approaches. In addition to this, other chains have reported similar problems. For example, Sports Direct found Mike Ashley recently commented that retailers in the UK have seen their worst November and December in many years.

And even when you factor Black Friday and Cyber Monday, in which there was a sharp increase in sales, particularly in electronics, this year’s performance has been poor in the retail sector. It’s also been pointed out that the fall in confidence has, as far as the experts are concerned, been caused by fears over the future of the economy as a whole, rather than by the individual’s finances.

In an interview, Joe Staton from GfK, said: “In the face of ever-rising costs, and the threat of higher inflation combined with uncertainty around the outcome of the Brexit negotiations, consumers are in a chilly mood of despondency and putting on a glum face when they look at the prospects for 2019.”

Howard Archer, the chief economic adviser to the EY Item Club, also noted: “There are bound to be suspicions about the November data, given that the ONS has acknowledged that it is not easy to seasonally adjust for Black Friday data given the changing nature of promotions. Furthermore, the underlying performance of retail sales still looks lacklustre, with volumes up a modest 0.4% in the three months to November compared to the three months to August.”