Confidence among British consumers and businesses is now at its weakest in months as worries about the impact of Brexit are growing in the run up to the October deadline, surveys show.
The closely watched GfK UK Consumer Confidence Index fell this month to a level last seen in January. It was last weaker six years ago. Meanwhile, a survey by Lloyds Bank revealed a plunge in business sentiment to its lowest level since 2011.
The findings chime with a European Commission poll released on Thursday. It showed that optimism among UK consumers and in the dominant service sector – both engines of Britain’s economic growth – tumbled to its lowest point since the early part of the year.
“Until Brexit leaves the front pages – whenever that will be – consumers can be forgiven for feeling nervous not just about the wider economy but also about their financial situation,” said Joe Staton at GfK.
“That’s an important distinction because a significant development in August is the sudden drop in views on personal finances over the next 12 months.”
According to the survey, although UK consumers’ views of the economic situation have been deeply negative for months, they have been moderately upbeat about their personal finances. That gap persisted in August but started to narrow, with consumers now feeling broadly neutral about their personal situation.
They also increasingly think it is a good time to save – a growing trend since soon after the EU referendum.
Britain’s impending withdrawal from the EU has been on companies’ minds too.
Hann-Ju Ho, a senior economist at Lloyds Bank, pointed to the “ongoing economic uncertainty” as the main reason business confidence remains very low compared with its historic norm. As throughout this year, firms expect that leaving the EU will have a negative impact on their business.
Sentiment worsened in August across all sectors apart from construction. In manufacturing and retail it fell to its lowest level this year, according to the Lloyds poll.
Comparable indicators in the euro zone paint a brighter picture. The reading for consumer confidence in the European Commission survey came in at -7.1 for the area compared with -11.4 for the UK. But the contrast was even starker between euro zone and British service firms, with the readings standing at 9.3 and -15.4 respectively.