UK consumer confidence increased slightly in August, according to a widely watched survey, despite a series of indicators forecasting a deteriorating outlook for the nation’s economy amid stalling Brexit talks.
GfK’s consumer confidence index increased from minus 12 in July to minus 10 in August. Any reading below zero means that more people are negative than positive about the economy’s future.
The overall index takes into account a number of factors, including people’s view of their own financial situation and that of the economy as a whole.
When asked about the prospects of the UK economy over the next twelve months, a net balance of minus 27 had a negative view, up one point from July but down five from this time last year.
People’s opinion of their personal financial situation remains surprisingly positive, with a reading of plus 5, up three points on last month and one point higher than August 2016.
This comes despite real wages falling in recent months as pay rises lag inflation. Inflation has increased sharply, largely thanks to a fall in the value of the pound since the Brexit vote last June.
The Bank of England warned in July that consumer debt was increasing rapidly and has now reached £200bn, a figure last seen during the financial crisis in 2008.
GfK’s index also indicated that more people consider now a good time to save than they did twelve months ago and people are less inclined to make big purchases.
Joe Staton, head of market dynamics at GfK warned about any premature optimism from the slight uptick in the overall confidence reading.
“The index has a lot of ground to regain to get back to black,” he said. “So is this month’s rise significant? Or could we simply be witnessing a dead cat bounce over the dog days of summer?”
