October 31, 2019
By David Milliken
LONDON (Reuters) – Britain’s longest-running measure of consumer sentiment slipped back to its joint-lowest level since 2013 this month, as Brexit uncertainty weighed again on households’ assessment of the economic outlook.
British consumers have generally remained upbeat since 2016’s referendum to leave the EU – partly offsetting weaker business investment – but in recent weeks morale appears to have softened, boding poorly for spending in the run-up to Christmas.
The GfK consumer sentiment dropped to -14 in October from -12 in September, a slightly bigger fall than economists had forecast in a Reuters poll. The index was last this low in August, and has not been lower since July 2013.
“The ongoing machinations in Westminster appear to be impacting how we view our personal financial situation for the coming year with a notable fall … in this measure in October,” GfK strategy director Joe Staton said.
The survey took place between Oct. 1 and Oct. 14, before Prime Minister Boris Johnson secured a new Brexit deal, which he has since abandoned trying to pass through parliament in favor of holding an early election on Dec. 12.
Britain had been due to leave the EU on Oct. 31, but Johnson was forced by parliament to ask for a delay after failing to pass his transition deal in time and the Brexit deadline has moved back to Jan. 31.
The GfK survey showed falls across all five measures it use to calculate sentiment, with the steepest decline coming in consumers’ assessment of how their personal finances were likely to evolve over the next 12 months.
British households declared themselves insolvent at the highest rate in eight years during the 12 months to the end of September, according to official data on Wednesday.
Separately, there were also signs that Brexit uncertainty has weighed on Britain’s commercial property market. Some 62% of surveyors believe the market had entered a downturn in the three months to September, the most since the survey began in 2015 and up from 53% in the last quarter, according to the poll from the Royal Institution of Chartered Surveyors.
Retail was the hardest-hit real estate sector, RICS economist Tarrant Parsons said.
“It remains to be seen what impact the latest Brexit developments have on confidence across the sector, but with the picture unlikely to become clear until into the New Year it may well mean hesitation continues over the near term,” he added.
(Reporting by David Milliken, editing by Andy Bruce)