Tuesday 16 January 2018

Consumer confidence at lowest level in UK since vote to quit EU

Britain’s economy has shown signs of strain in recent weeks with rising inflation hitting households
Britain’s economy has shown signs of strain in recent weeks with rising inflation hitting households
Colm Kelpie

Colm Kelpie

Consumer confidence in the UK has fallen to its lowest level since the Brexit vote last year as the rising cost of living and the uncertain result of the general election left shoppers felling nervous.

The consumer confidence index from market research fim GfK slumped to minus 10 last month, the lowest reading since the minus 12 recorded in the wake of the referendum last summer.

Its survey of 2,000 Britons, carried out before and after the June 8 election, found their attitude toward the economy and their personal finances deteriorated.

A gauge of their inclination to make major purchases also plunged to the lowest in a year.

And that's yet further worrying news for Irish exporters.

Signs of strain have emerged in the British economy in recent weeks, with rising inflation putting the squeeze on households.

Prices are rising faster than people's wages are going up.

The survey "reveals a sharp drop in confidence among consumers across all measures," said Joe Staton, head of market dynamics at GfK.

"The twin pressures of higher prices and sluggish wage growth are squeezing household finances and adding to widespread fears of a Brexit-induced economic slowdown."

The pound hovered close to 88 pence against the euro.

New forecasts by economics consultancy CEBR - the Centre for Economics and Business Research - show that the UK economy will grow by just 1.3pc in 2017. This marks a substantial downward revision from its April forecast of 1.7pc growth.

"The newly-created political uncertainty is likely to lead to an economic slowdown this year and next via lower business investment and weaker consumer spending," CEBR said in a note.

"Meanwhile, uncertainty about not only politics but also Brexit will hold back business investment."

Meanwhile, British insurance giant Equitable Life is considering setting up a European Union subsidiary in Dublin so that it can serve Irish and German customers after Britain leaves the bloc, its chief executive said yesterday.

Equitable Life manages life and pensions policies that are closed to new customers.

It has close to 400,000 policyholders in Britain and smaller numbers here and in Germany, CEO Chris Wiscarson told Reuters.

"We are having to make sure we have plans in place to deal with whatever comes out of the next couple of years," he said.

Equitable Life would "probably" set up a regulated subsidiary in Dublin to retain passporting rights to manage policies for customers in Germany, but no decision had been made yet, he said.

Equitable Life has around 200 staff in total, and any Dublin unit will employ a small number of staff.

It comes as the diary for former Finance Minister Michael Noonan shows that he and former Financial Services Minister Eoghan Murphy met with executives from Japan's Mizuho Securities.

Mizuho was said to be weighing up Dublin for a post-Brexit move.

Irish Independent

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