UK Consumer Confidence Falls on Brexit
UK consumer confidence fell in the days following the UK’s vote to leave the European Union as uncertainty from the fallout of Brexit hit Britons.
Pollsters GfK conducted a special post-Brexit survey following the UK’s vote to leave the European Union. The details of the survey show that Britons are worried and feeling less well-off than they were before the vote took place. This feeling pushed the headline index figure down to -9 in the first week of July, 8 points lower than June’s -1. The drop was spread across all areas on which consumers were quizzed, with the 2,002 people who were surveyed feeling the least positive about the UK economy over the next 12 months.
“During this period of uncertainty, we’ve seen a very significant drop in confidence,” said Joe Staton, head of market dynamics at GfK.
When British consumers lose confidence they have a tendency to feel poorer. This makes them less likely to buy expensive items or goods and limits their appetite for taking financial risks. The survey showed the immediate response to Brexit was no different.
The results of the GfK survey shows that consumer confidence over making major purchases – which includes property, cars and big family holidays – fell to the lowest level in over a year. The survey also reports that a third, or one-in-three, of respondents expect the price of goods in the UK to rise, up from one-in-ten in the June survey.
In the meantime, some calm has returned to the financial markets with less volatility, or sharp price changes, in stocks and shares. That suggests investors are expecting the UK to remain an important financial centre and also a popular destination for skilled workers and migrants.
If the UK and London in particular lost its appeal as a place to live, work, pay taxes and spend their earnings, then its likely share prices would not have recovered so swiftly.
House prices, meanwhile, remain a hot topic of conversation and comment and a number of experts have been sharing their views. Some, like one of the world’s oldest banks, Coutts, expect house price falls to be limited. Why? Because there are still too few homes in the country to meet the demand for them. In any market place, if something is in high demand then its more valuable and its price rises.
Others, though are less positive. French investment bank Societe Generale said that London house prices in particular are far too high and that the shock of Brexit and loss of confidence it is causing, mean prices could fall by as much as 50%.
The eventual outcome will probably be somewhere in between these too, although for home-owners, hopefully closer to Coutts view and for those unable to afford to buy a home, hopefully closer to Societe Generale’s outlook!
With so much uncertainty around, now could prove to be the perfect opportunity to attend your local property auction and see what’s on offer. If your finances are secure and you’re confident over achievable rents and tenants, then you could bag a bargain. For sellers, an auction room offers transparency and certainty – two things that are most definitely not available on the open market at the moment.
Whatever your view, it’s clear that Brexit has created waves that are hitting investors and consumers and that uncertainty over the UK’s future needs to be addressed by the Government and new Prime Minister Theresa May.