UK consumer confidence at four-year low as Brexit bites
CONSUMER sentiment in the UK has fallen to a four-year low as households took a pessimistic view of their finances.
That’s bad news for the numerous Irish businesses that pump their produce into the UK market.
And in further gloomy news, IMF chief Christine Lagarde said pre-referendum warnings of slower growth in the UK were coming true.
But there was some positive news. The country’s budget deficit narrowed, helped by strong income tax revenue.
Public sector net borrowing, excluding state-owned banks, fell to £8.7bn last month, the UK Office for National Statistics said, 1.9pc less than the same month last year and slightly below economists’ forecasts.
But Prime Minister Theresa May and Chancellor Philip Hammond face a challenging task trying to persuade voters of positive signs in the economy.
Separate data from GfK showed that consumers are at their gloomiest in four years.
An index of sentiment slipped to -13, its lowest since December 2013, from -12 in November.
German market research institute GfK said Britain’s departure from the European Union and the Bank of England’s first
interest rate rise in a decade were weighing on consumers, who felt their personal financial situation had worsened and they were less keen to make big purchases.
“It has been a slipping and sliding year,” said Joe Staton, Head of Market Dynamics at GfK.
“The Overall Index Score has slipped from - 7 in January to -13 in December – and not a single positive score in between. In fact, we have not been in positive territory for nearly two years.
“We need to see several issues move on before the downward trend of the consumer mood changes. We need to have a better sense of how Brexit will pan out, and also of how quickly and how far interest rates will rise. But none of this will be resolved quickly so there’s every likelihood that 2018 will take us lower.”
Inflation in the UK also hit its highest in nearly six years at 3.1pc in November.
IMF managing director Lagarde, said the slowing British economy was in contrast to accelerating growth elsewhere in the world.
Speaking at the launch of its latest assessment of the UK economy, Ms Lagarde said Brexit is having an impact.
She said that the IMF feared a Brexit vote would lead to a weakening in sterling and higher inflation, which would put a squeeze on households and investment.
That was happening, she added.
“People said ‘Oh those experts’, but we are seeing the narrative we identified as a potential risk being rolled out as we speak.
“This is not the experts speaking, it’s what the economy is demonstrating.”