Consumer Confidence Slips as Summer Spending Sets In

You don’t need national polling data to assess your own finances, but the information does provide a reference point, measuring your financial health against a broader backdrop. In the current context, your personal finances may cause worry. Recent data suggests you’re not the only one concerned about your financial future; it appears overall consumer confidence is down, amidst rising worry over personal finance.

Consumer sentiment provides valuable clues into the health of the economy, helping analysts recognise personal finance trends. Are shoppers turning out to retail stores? How much do families plan to spend on summer holiday this year? Do workers feel a sense of job security? Answers to these and other questions about individual financial affairs contribute to a collective consensus, illustrating how UK earners feel about their finances.

Personal Finance Concerns Rattle Consumer Confidence

According to the GfK Consumer Confidence Index, UK consumer confidence has dropped in June. The Index shows a three point slide for the month. It is thought personal finance concerns are at least partially to blame for the downward move. While the overall consumer confidence figure was down three points to -13, compared to May, confidence experienced a year on year drop of four points.

In addition to measuring overall public financial sentiment, the Consumer Confidence Index also ranked UK citizens confidence in their personal finances. Over the course of the year, confidence in one’s own personal finances has slipped 3 points, landing at 2 on the Index. At the same time, confidence in the general economy during the past year dropped 2 points. The Index also underscores particularly gloomy sentiments about the future of the economy; consumer confidence in the year ahead has gone down by 4 points.

Another metric used to evaluate economic confidence, the major purchase index, was also down for the month, losing 2 points from its most recent position. Despite the negative trends in consumer confidence, UK workers continue to have access to online emergency loans, providing fast money between paydays. A bright spot amidst the declining figures, the savings index rose by three points, according to the most recent analysis.

Personal Financial Focus

Consumers remain concerned about the future of the UK economy on the whole. Brexit uncertainty and mixed economic signals have kept workers worried for much of the year, so the index measuring general economic concern comes as no surprise. What may be more troubling, according to some observers, is the deterioration of individuals’ confidence in their own personal financial fitness.

It is believed consumer confidence figures represent genuine fears. With the major purchase index also down, lagging confidence could spell hard times for the UK summer economy.

Though news of the rising savings index is welcomed, showing UK consumers are becoming more mindful of the importance of a nest egg, it may be too little, too late. A substantial number of UK households lack adequate savings, so the growing trend emphasising personal finance concerns may be on point. Without enough savings in reserve, many UK families are not in a position to absorb financial turmoil caused by a no deal Brexit – or even a significant unexpected expense.

Underscoring the dismal state of personal savings, the average rate for decades leading up to 2018 was more than 8.5 per cent, yet the rate only increased from 4.5 per cent in the third quarter of 2018 to 4.8 per cent during the fourth quarter of the same year. In the mid-nineties, the savings rate reached an all-time high of more than 15 per cent. By comparison, recent paltry performance shows a lot of room for improvement.

Consumer confidence slipped in key areas in June, responding to increasing personal finance concerns shared by many UK families. Shaky consumer confidence and a trend toward putting-off major purchases may not bode well for the UK economy this summer – particularly as a no-deal transition looms amidst government leadership changes.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

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