Consumer confidence plummets post Brexit with recession fears
Consumer confidence has plummeted in the wake of the vote to leave the EU and a recession “cannot be ruled out at this point”, a report has warned.
The YouGov/CEBR (Centre for Economic and Business Research) Consumer Confidence Index slumped by seven points in the four days after the Brexit vote to match a level not seen since May 2013.
The figure had already fallen notably between May and June, mainly because of homeowners’ concerns about property prices over the next 12 months and the levels of business activity at people’s workplaces over the coming year, the report said.
CEBR director Scott Corfe said: “Brexit could lead to a marked slowdown in the economy over the coming months.
“The latest YouGov/CEBR consumer confidence data show households are highly spooked by recent developments, which we expect to filter through into a much weaker environment for retail sales and household spending – particularly on big-ticket items.
“A recession certainly cannot be ruled out at this point.” Stephen Harmston, head of YouGov Reports, said: “Consumer confidence has collapsed since the vote to leave the EU. Four days of uncertainty has wiped out the gains made over the last three years.
“It has not yet reached the depths of the financial crisis in 2008 but we expect it to decline further as some of the consequences of Brexit kick in. The only question now is will it slump to the levels it reached eight years ago or will it pull itself out of this dive?”
Meanwhile, the latest pre-Brexit figures from the GfK Consumer Confidence Index show confidence is languishing in negative territory with “plenty of volatility” expected ahead – at least until Brexit negotiations are under way.
The index shows “deepening pessimism” over the general economic situation, with the measure already 18 points lower than this time last year ahead of last week’s vote. The overall index measure of consumer confidence remained the same in June at minus 1.
However consumers feel more positive about their personal finances than they did this time last year, and the forecast for the next year has increased by one point this month and is three points higher than last June.
Joe Staton, head of market dynamics at GfK, said the current data did not yet provide insights into how the referendum result had affected consumer sentiment.
But he said: “Nevertheless, one trend that continued in the run-up to the referendum is a deepening pessimism over the general economic situation. As we approached voting day, this was already 18 points lower than in June 2015 and it’s almost certain we’ll see this worsening when next month’s results are in.
“Before the referendum there was an uptick in confidence about personal finances, and as of mid-June this measure was more positive than 12 months ago. But once again it is difficult to see this holding up.
“In these extraordinary consumer circumstances, all bets are off until we all know more. We can expect plenty of volatility in consumer confidence at least until Brexit negotiations are under way. The longer-term mood will then depend on how smoothly those negotiations go.”