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UK consumer confidence inches down in August

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An uptick in spending as Brits head back to high streets after the end of Plan B measures is encouraging firms to take on more staff, according to research by accountancy firm BDO

Consumer confidence among Brits edged down over the last month driven by concerns over the possible economic implications of future surges in Covid cases, according to fresh data published today.

Research from GfK shows consumer confidence dropped one point over the last month to -8 points in August 2021.

The marginal decline is likely to have been triggered by uncertainty over whether an uptick in Covid infections over the autumn months may prompt policymakers to reintroduce restrictions on economic activity to curb the spread of the various.

However, GfK’s figures show households’ confidence in their personal finances over the next year remains strong. The personal financial situation was constant at 11 in August, up from just one in the same last year.

Joe Staton, client strategy director at GfK, said: “Against a backdrop of cooling headline inflation and soaring house prices, the UK consumer confidence index is stable at minus 8 this August.

“Importantly, expectations for our personal financial situation for the coming 12 months are holding up and this positivity bodes well for the economy going forwards this year and next.”

Linda Ellett, head of consumer markets, leisure and retail at KPMG UK, said: “It appears that the final stage of unlocking, the removal of self-isolation for the double-jabbed, and the aftermath of the ‘ping-demic’ may have brought with them a degree of apprehension for the public, which is reflected in the slight drop in consumer confidence in August.”

Covid-induced saving habits could prove to be stickier than expected

The research did indicate savings habits adopted amid Covid-induced lockdowns could prove to be stickier than expected.

GfK’s major purchase index fell five points to -3 in August, while the savings index increased by five points.

In its latest Monetary Policy Report, the Bank of England has predicted that demand in the UK economy is likely to remain elevated over the coming months as consumers deploy savings accumulated since the onset of the pandemic.

“Interestingly, this month the five-point fall in the major purchase index is counterbalanced by the five-point rise in the savings index, suggesting that consumers could be considering switching into saving rather than spending,” Staton added.