UK consumers remain cautious

3 November 2014

LONDON: Consumer confidence in the UK remains in negative territory, although it is at a high level compared to the height of the economic crisis and there are still some positive signs, two new consumer surveys have shown.

The latest monthly UK Consumer Confidence Barometer released by GfK, the market research firm, declined for a second month in October to -2 from -1 in September.

Three of the five measures used to calculate the index saw decreases and these included the major purchases index (-5), confidence about the economy's prospects over the next 12 months (-2) and the general economic situation over the last 12 months (-2).

However, GfK said the forecast for personal finances over the next three months increased +3 to four points, or six points higher than October 2013, and even though the major purchases index declined, it was six points higher than this time last year.

At -2 points, UK consumer confidence was in a much better state than at the peak of the financial crisis when the GfK index fell to -37, or in early 2013 when it was -27, the International Business Times reported.

Nick Moon, managing director of social research at GfK, said it looked as though the period of rapid improvement between April 2013 and June 2014 has "completely run out of steam", although he did not rule out the possibility that it might increase.

"This is not, of course, to say that it will not start to rise again soon, but the opportunities for it to do so before we get seriously into the general election campaign are fast running out," he said.

"It is likely that people will have to start feeling personally better off if the Index is to get solidly into positive territory," he added.

Meanwhile, Nielsen's UK Consumer Confidence Index for Q3 2014 offered a more upbeat measure of British sentiment, although it cautioned that consumers remained pessimistic about the future.

Nielsen found that UK consumer confidence increased +3 to 93 points over the quarter, taking it to its highest level since Q3 2007, Marketing Magazine reported.

Nearly half (47%) said they felt confident about their personal finances, the highest level for seven years, while those feeling that now is a good time to make purchases rose 2 points to 42%. But the main Index remained below the 100 point benchmark.

"Confidence is moving in the right direction," said Steve Smith, managing director of Nielsen UK. "But the fact remains, as a whole, Britons are still pessimistic about what's ahead."

Data sourced from GfK, International Business Times, Marketing Magazine; additional content by Warc staff