The Brexit vote has battered consumer sentiment in the UK, a survey has found, highlighting worries about the economic outlook and fears over inflation.
The market researcher GfK recorded the biggest slide in consumer confidence for 21 years in its one-off poll following the referendum on 23 June. The group, which has been monitoring UK consumer confidence since the 1970s, said measures of confidence about the economic outlook, people’s personal finances and big purchases, had all fallen, according to the post-referendum poll of 2,002 people run between 30 June and 5 July.
The headline confidence index fell to -9 after the poll from -1 in the regular June survey carried out before the referendum. The compilers said that by splitting the results as to how people said they had voted, they had found that those who had opted for remaining in the European Union were at -13, while leavers appeared more optimistic, at -5.
“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,” said Joe Staton, head of market dynamics at GfK.
Six in 10 respondents, or 60%, expected the general economic situation to worsen in the next 12 months, up from 46% in June. Only 20% of consumers expected it to improve, down from 27% in June. The proportion of people who believed prices would increase rapidly in the next 12 months jumped 20 percentage points from 13% to 33%.
There were distinct differences in how confidence had altered regionally, GfK said. In the north of England confidence had dropped 19 points and in Scotland it had fallen 11 points. In southern England, including London, there was a two-point drop.
The survey chimes with separate polls by YouGov and the consultancy Cebr, conducted both before and after the referendum. They revealed a crash in consumer confidence after the result was announced.
Anecdotal evidence suggests consumers have become more cautious about big purchases and about buying property as the outlook for jobs, wages and house prices becomes more uncertain.
Marks & Spencer reported its biggest fall in clothing sales in more than a decade on Thursday as its new chief executive, Steve Rowe, said confidence had weakened in the run-up to the EU referendum.
The accountants BDO published a report on Friday suggesting there was an immediate drop-off in sales after the leave vote and that last month marked the weakest June performance for the high street for more than a decade. Footfall successively declined as the month went on, with the worst performance coming in the final week of June as the leave vote was confirmed, BDO said.
Worries about employment were fanned on Thursday by the Organisation for Economic Co-operation and Development, which said that the vote to leave the EU could exacerbate the UK’s already weak recovery in pay growth since the financial crisis. Brexit also “represented a cloud over the UK’s recent ability to create jobs”, the OECD said in its annual employment outlook.
The OECD highlighted the UK as suffering from one of the weakest pay recoveries among its 34 member countries and urged the government to do more to raise living standards. That call was echoed by the Trades Union Congress.
Frances O’Grady, TUC general secretary, said: “Workers are still paying the price from the last recession, with UK wage growth far behind the rest of the OECD. With the OECD warning that Brexit will harm jobs and growth, we need urgent action from government to make sure that workers do not pay the price again.”
A separate report suggested that Brexit worries were also weighing on recruitment in the UK ahead of the referendum. The number of people placed in permanent positions fell in June, marking the first decline in 45 months, according to a monthly jobs report from the data company Markit and the Recruitment and Employment Confederation (REC).
There was also a slowdown in salary growth for permanent and temporary roles, according to the report, which was compiled with data from recruitment firms collected between 13 and 24 June. Almost all responses were collected before the EU referendum result was known, REC said.
“Uncertainty during the run-up to the referendum saw many employers suspend permanent hiring and instead bring in temporary, contractor or interim staff to hedge against potential changes to their growth prospects,” said REC’s chief executive, Kevin Green.
“While it is too early to assess what the impact of the vote to leave the EU will be on jobs, our data underlines the need for uncertainty to be minimised so that our economy and our labour market are not adversely affected. The best thing for business right now is clear and calm leadership and as much clarity as possible on what the post-EU future will look like.”
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