Consumer confidence in the United Kingdom took a hit in February, as concerns about the state of the economy grew ahead of an upcoming election, according to a monthly survey by research group GfK. The Consumer Confidence Barometer dipped two points to minus-21, contrary to expectations that it would improve slightly to minus-18.
The survey revealed that four of the five components used to compile the index were down compared to January. Only the measure of personal-finance expectations for the next 12 months remained steady. Indexes for the economic situation over the last year and the next 12 months both declined, as did the measure for propensity to buy major purchases.
The decline in consumer outlook for the economy is expected to have an impact on voters in a general-election year. GfK client strategy director Joe Staton emphasized that the recent performance of the economy will play a crucial role in determining election results.
The survey also indicated a mixture of bad news and good news. While the recent improvement in the index, which reached a two-year high in January, has stalled, consumers’ outlook for their personal finances has not slipped back. In fact, there are signs that the cost-of-living squeeze caused by high inflation and tight financing conditions is easing. The personal-finance measure, although flat compared to the previous month, was considerably better than February of the previous year, suggesting that consumers have become more confident in spending.
Staton cautioned that while all the measures this February are better than a year ago, consumer confidence alone will not lead to a brighter economic future. Other factors need to come into play for sustained economic growth.
The timing of this survey is significant as it is the last one before Treasury chief Jeremy Hunt’s budget statement next month. The results will likely be taken into consideration when shaping economic policies moving forward.
Overall, the decline in consumer confidence in the U.K. reflects growing concerns about the state of the economy and its impact on the upcoming election. While there are some positive signs, such as an improvement in personal-finance expectations, it is clear that more needs to be done to ensure a brighter economic future for the country.
