Shoppers now 'resolutely gloomy' about the future of the UK economy as outlook darkens

Confidence falls as inflation looks set to rise sharply while wages stagnate

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The Independent Online

Shoppers are now “resolutely gloomy” about the country’s economic future and are putting off big purchases as uncertainty mounts, according to a respected survey.

The GfK Consumer Confidence Barometer, which surveys 2,000 people, recorded a measure of –22 for confidence in the economy over the next year, down from -17 in October and –9 in September. A negative number means more people think things will get worse than vice versa.

Major purchases took the biggest hit according to the report, with the index falling 9 points from 14 in October to 5 in November. People’s view of their personal financial situation over the next twelve months also fell. However, both measures are above their respective post-referendum nadirs.

Spending has so far kept up as buyers stock up on Christmas gifts but the prospect of sharply increasing prices, stagnant wages and further uncertainty over access to the UK’s single market have all weighed heavily on shoppers’ expectations over the past month. Earlier in November, the Bank of England made a dramatic rise to its inflation forecast, predicting it will almost triple from 1 per cent to 2.7 per cent in 2017 as the effects of a weakened pound are felt.

National Institute for Economic and Social Research was even more pessimistic, saying it expected inflation to quadruple to about 4 per cent in the second half of next year.

Joe Staton, Head of Market Dynamics at GfK, said, “the big theme is the reduced confidence in the UK economy looking back and ahead. We are viewing our economy over the past 12 months with increasing despondency.”

Staton said that “despite strong GDP numbers”, shoppers are “resolutely gloomy about the outlook” for the economy. 

“The ‘next 12 months’ figure has been low since the June vote to leave the EU as ongoing economic turmoil, inflationary pressures and global anxiety impact our levels of confidence.

“Despite recent strong retail sales, we are reporting a sharp -9 point drop in the Major Purchase Index this month and this will be an acute concern for retailers as they gear up for the key Christmas selling period.”

In stark contrast, US consumer confidence jumped to its highest level in 9 years, it was announced today. The world’s largest economy also grew even faster than initially thought in the third quarter, based in large part on a jump in spending, the US Commerce Department said.

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