UK consumer confidence at pre-Brexit vote levels
GfK’s long-running consumer confidence index
says people in Britain are becoming more confident about making major purchases, including cars, despite ongoing uncertainty about the UK’s long-term economic future. Joe Staton, head of market dynamics at GfK, said: 'British consumers appear to have shrugged off Brexit fears about the economy.' However, he went on to question whether confidence would continue to rise in the coming months, or if consumer optimism was misplaced and would collapse again if fresh political or economic problems arose. It is likely that consumers are concentrating on their own immediate needs, as there is little point trying to make decisions based on the flow of contradictory economic predictions as analysts respond to a constantly changing market. The recent sudden fall in the value of sterling
is an example of the hair-trigger nature of market sentiment, as it was sparked by automated selling which may have been linked to calls by French president François Hollande for the EU to take a tough stance with the UK during Brexit negotiations. In the coming months, the positive outlook may change for UK consumers as price rises caused by sterling’s decline force up household spending
. The budget in November is also a key moment, as it will reveal the scale of cuts required to tailor government spending to a substantial decline in tax revenue that is expected from the post-Brexit vote economy.