You are here
UK consumer sentiment sinks to 16-month low, house prices weak
[LONDON] British consumers, the main drivers of the economy, are their least confident since just after last year's Brexit vote, and business morale has also softened, surveys showed on Thursday, adding to signs of a further economic slowdown in 2018.
Separate data showed British house price growth, which has weakened since last year's referendum decision to leave the European Union, was slower than expected in November.
The GfK consumer confidence index dropped by 2 points to -12 in November, its lowest since July 2016 and below the average forecast of a decline to -11 in a Reuters poll.
"Sadly there's no festive cheer," said Joe Staton, an executive at the market research company. "Household jitters following the recent interest rate hike, squeezed incomes, higher inflation and economic uncertainty have dampened the consumer mood across the UK." Britain's economy has slowed this year as higher inflation - largely due to the fall in the pound after the Brexit vote last year - pushed up costs for households and businesses.
At the start of the month, the Bank of England raised interest rates for the first time in over a decade to tackle inflation that is at a five-year high, and last week government forecasters slashed their growth outlook.
GfK said households' willingness to make big purchases fell to its lowest level since October 2014 in bad news for retailers in the run-up to Christmas.
A separate survey by Lloyds Bank showed business confidence slipped this month - with economic optimism the lowest since June 2016.
"Firms are confident about their future, although the fall in economic optimism is an indication of economic and political uncertainties ahead," said Hann-Ju Ho, senior economist at Lloyds Commercial Banking.
British Prime Minister Theresa May hopes to move Brexit talks on to trade after a meeting with EU leaders next month. But she first needs to make progress on Britain's outstanding bills, the rights of EU citizens in Britain, and future border arrangements between the United Kingdom and the Irish Republic.
British media have reported that May was ready to pay around US$59 billion to leave the EU.
The British Chambers of Commerce said on Thursday that exporters were benefiting from a weaker pound and stronger demand from the faster-growing euro zone economy.
The volume of trade documentation - a leading indicator for export volumes - was four per cent higher than a year earlier and its third highest since records began in 2004.
But some exporters were suffering from higher raw materials costs or staff shortages.
"Taken together with higher domestic costs ... a tipping point may soon be reached for some firms - with consequences for investment, recruitment and trade," BCC director-general Adam Marshall said.