LONDON: UK consumer spending has slowed and businesses' optimism has declined, according to new surveys which indicate how Brexit and political uncertainty are affecting the country's economic outlook.
Figures from Visa, the credit card company, suggest that consumer spending has fallen for the first time in almost four years. According to the company's estimates, spending was down 0.3% in the three months to 30th June, compared to the same period in 2016.
At the same time, the accountancy firm Deloitte registered a sharp fall in optimism among 120 FTSE 350 companies in the second quarter of this year: 72% of CFOs surveyed believed the overall business environment would be worse after Brexit; just 8% of respondents expected an improvement.
Commenting on the consumer spending report, Kevin Jenkins, UK & Ireland Managing Director at Visa, observed that the figures provide further evidence "that an increase in the cost of living, coupled with slowing wage growth, are beginning to squeeze household disposable income.
"It's clear that inflation is beginning to affect shopping habits too, with consumers diverting their spending to essentials," he added. While there was growth of 2% in food and drink spend, the experience sector – which has in recent years, outperformed the index – dropped for the first time in nearly four years.
While the UK economy defied many predictions that the vote to leave the EU would result in immediate financial meltdown, the fall in sterling's value has driven inflation, forcing households and businesses to tighten their belts.
The Deloitte report, said David Sproul, CEO Deloitte North West Europe, "underscores the importance of the Brexit negotiations producing a favourable environment for UK businesses, with access to the skills and markets they need for their future success."
Sproul added that businesses now see Brexit "slowing investment and hiring, as well as an overall weaker business environment once the UK leaves the EU".
Data sourced from Visa, Deloitte; additional content by WARC staff