UK consumer confidence drops to lowest level since Brexit vote

[LONDON] Sentiment among UK households fell to its lowest level since the Brexit vote as the rising cost of living and inconclusive general election deterred Britons from spending on big-ticket items.

GfK's consumer-confidence index dropped to minus 10 this month from minus 5 in May, the market-research firm said Friday. Its survey of 2,000 Britons, carried out before and after the June 8 election, found their attitude toward the economy and their personal finances deteriorated. A gauge of their inclination to make major purchases also plunged to the weakest since the European Union referendum a year ago.

The findings point to continuing pressure on consumer spending, the engine of the British economy. With Prime Minister Theresa May reliant on the support of a Northern Ireland party to stay in power as complex EU negotiations get under way, households are facing heightened political uncertainty at a time when rising inflation triggered by the weaker pound is eating into their incomes.

The survey "reveals a sharp drop in confidence among consumers across all measures," said Joe Staton, head of market dynamics at GfK.

"The twin pressures of higher prices and sluggish wage growth are squeezing household finances and adding to widespread fears of a Brexit-induced economic slowdown."

June's decline left the index of overall confidence just shy of last year's post-referendum low, reflecting consumers "negative sentiment" about their personal financial situation and expectations for the wider economy, Mr Staton said. GfK carried out its survey between June 1 and June 15.

In a separate report on Friday, Lloyds Bank Commercial Banking said business confidence rose this month and hiring intentions strengthened "significantly," citing a survey of 300 companies. Still, firms' economic optimism fell to a five-month low, the bank said in its latest Business Barometer, suggesting some concern about wider prospects remains.

Lloyds also conducted its study before and after the election, and post-vote data - accounting for more than half of the responses received - indicate the mood among businesses soured.

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