UK consumer confidence has remained stable on the referendum results, at -8% quarter on quarter. Confidence in job security falls slightly to -10% from -7% the previous quarter – with particularly younger consumers taking a hit in confidence. The long term prospects remain uncertain, however, with almost all age groups seeing a decrease in confidence.
The long-term effects of the EU referendum remain relatively uncertain, as the fallout continues and political wrangling begins. The effect of the decision on the sentiment of the British public has recently been surveyed by Deloitte, in a new report titled ‘The Deloitte Consumer Tracker’. The survey, performed three days after the referendum, involved 3,000 UK adults across all agree groups and social standing.
The headline result of the survey is that consumer confidence remains flat, at net -8%. Job security has fallen slightly, however, down three points to -10%. Consumers continue to spend on essentials, while a slight uptick (+2% from -3%) in discretionary spending is also noted. Retail growth is up slightly, by 1.8% while inflation is up at 0.5%.
Ian Stewart, Chief Economist at Deloitte, says, “We surveyed UK consumers in the three days after the Referendum, against a backdrop of the resignation of the Prime Minister and a sell-off in UK equities and the pound. Despite the turmoil, confidence among our sample of 3,000 adults was, remarkably, unchanged from March.”
The research finds that sentiment towards job security have fallen for 18-34 year olds, from around 0% to around -10%, ending a period of relative stability in sentiment. For 35-54 year olds, job security sentiment continues to trend downwards from a peak in Q3 2015, hitting near -15% in Q2 of 2016. Confidence among those over the age of 55 is flat at around -7%.
The researchers also asked respondents to rank their sentiment related to their current personal situation. Household disposable income sentiment has increased from lows in Q2 2013 of -36% to -14% in Q2 2016, although the downward trend has flat lined. Considerable improvements to debt levels have been realised, however, falling from -15% in Q2 2012 to -1% in Q2 2016. General health and wellbeing has not improved greatly since 2012, falling from -13% to -11% this year. UK consumers also remain concerned about job opportunities and career progression, with sentiment running at -7%.
Looking ahead, the Deloitters finds that consumers are considerably less confident about the general economic situation going forward (next 12 months). While still a long way from lows recorded during the financial crisis, levels of concern are again at levels last seen in 2013. A drop of 33 points on the same time last year.
Stewart adds, “Consumer spending is the engine of UK growth, accounting for about two-thirds of activity. Maintaining consumer confidence, and spending, will be crucial to keeping the economy growing as the process of exiting the EU gets underway.”
Looking ahead however, consumers across almost all age groups are pessimistic about their prosperity over the coming 12 months. The net percentage of consumers who say that their confidence over the next 12 months has improved in terms of their overall personal financial situation is -41% for those between 18 and 24, -42% for those between 25 and 34, and -38% for those between 35 and 44. Job security among those just beginning on the job market too is lower, at -32% for 18 to 24 year olds and -29% for those between 25 and 34. Only those 55+ have a relative equal sentiment, with a net of -6%. Almost all respondents see their sentiment towards investment decrease, while most expect a worsening situation for both discretionary and non-discretionary spending.