Consumer confidence drops at sharpest rate in 21 years following EU referendum
New data has revealed that consumer confidence has dropped sharply following the result of the EU referendum. The long running GfK Consumer Confidence Barometer has fallen 8 points to -9 to mark the sharpest drop in 21 years.
Splitting the core index result by how people said they voted in the referendum, remainers were at -13 versus leavers who were more optimistic at -5. The survey was run from 30 June to 5 July to capture the mood of consumers immediately after the Brexit decision on 24 June.
Joe Staton, head of market dynamics at GfK, said: “In these extraordinary times this one-off CCB Brexit Special gauges the temperature of consumer confidence right now. During this period of uncertainty, we’ve seen a very significant drop in confidence, as is clear from the fact that every one of our key measures has fallen, with the biggest decrease occurring in the outlook for the general economic situation in the next 12 months.”
The results reveal consumer concerns about the economic outlook. Six in 10 said they expect the general economic situation to worsen in the next 12 months, up from 46% in June. Only 20% of consumers expect it to improve, down from 27% in June. The proportion of people who believe prices will increase rapidly in the next 12 months has jumped 20 percentage points from 13% to 33%.
There were distinct differences in how confidence has changed regionally. In the north of England, confidence has dropped 19 points and in Scotland it has fallen 11 points. In the south, including London, there has been a 2-point drop.
Amongst 16 to 29 year olds confidence has fallen 13 points, but this group was the most optimistic of all age groups.
The biggest drop in confidence, from an income perspective, was a fall of 16 points among households with income levels of £25,000 to £49,999.
Staton added: “Our analysis suggests that in the immediate aftermath of the referendum, sectors like travel, fashion and lifestyle, home, living, DIY and grocery are particularly vulnerable to consumers cutting back their discretionary spending.
“As we’ve learnt from previous periods of uncertainty, consumers turn to well-known brands they love and trust as a guarantee of quality and value for money. Now is the time for companies to understand and respond to consumer concerns by anticipating and meeting their needs.”
