It’s weird in the UK at the moment. You can almost reach out and touch the overall feeling of doom and gloom with the only people who seem to be cheerful being a few Brexiteers (like Andrea Leadsom with that painted-on perma-grin of hers).
But businesses and consumers aren’t convinced. Pessimists are being criticised by the Brexiteers for talking Britain down, as if turning that frown upside down would send the pound soaring, make the born-again racists want to hug an immigrant and force the EU to give us cheap, easy honorary club membership without having to obey its rules. But the vote has made pessimists of most of us it seems.
OK pro-Remain min-rant over. The point of this post is consumer confidence in Britain which, according to reports today hasn’t just fallen through the floor but is currently digging its way through to the earth’s core.
Accountancy firm BDO today said retail sales dropped sharply after the Leave vote with last month overall seeing the weakest June performance in over a decade and the worst monthly decline in five years. Footfall started fine but dropped throughout the month and got worse after the Leave vote was announced. Comp sales rose nearly 4% in week one, but they fell 3.6% across June as a whole and were down over 8% in the final week. Fashion sales fell 4.9% overall in June.
That reflects consumer confidence figures from market researcher GfK, which said its headline confidence index has plummeted to -9 following the Brexit vote. It was at a not-too-great -1 before the referendum. Is -9 that bad? You bet. It’s the worst fall in the index’s 21-year history.
GfK’s research was based on interviews with around 2,000 people starting exactly a week after the referendum. It looked at overall confidence in the economy’s future, personal finances and big purchases and found falls all round.
Interestingly, deviating from its usual approach, GfK also split its interviewees into whether they voted Leave or Remain (not a hard task given that the 52/48 split at the referendum really did show a country split almost down the middle). No surprise that the Remain voters had a consumer confidence reading of -13, but the Leave voters were also down, on -5.
The details of the poll are equally interesting:
- 60% expect to general economy to worsen in the next 12 months compared to 46% thinking that way pre-referendum.
- 2% expect the economy to improve compared to 27% before.
- 33% of people think prices will rise, up from 13% a month ago.
- Confidence in the North of England (which overwhelmingly voted Leave but which the economic experts trashed by the Leave campaigners say is likely to suffer most from the EU exit) fell 19 points.
- In Scotland, which voted Remain, it fell 11 points and in London, which voted Remain but is economically buoyant, it fell 2 points.