U.K. Consumer Confidence Is Buckling Under Brexit Pressure

1467256322_uk shopping retail

A shopper carries her bags along Oxford Street. Daily tracker suggests consumer confidence has collapsed.

Photographer: Jack Taylor/Getty Images
  • Daily tracker shows sentiment ‘has collapsed,’ YouGov says
  • GfK survey shows shaky view even before EU referendum

U.K. consumer confidence dropped this week after the country voted to leave the European Union, according to a survey.

YouGov Plc and the Centre for Economics and Business Research said their daily tracker of sentiment has dropped to the lowest in more than two years. From a level of 111.9 earlier in the month, it has since slumped to 104.3. Also released on Thursday, a separate report from GfK showed that households’ faith in the economic outlook was shaky even before the referendum on June 23.

The vote has created uncertainty about the possible future relationship of the U.K. and the EU, further complicated by Prime Minister David Cameron’s decision to resign and leave his successor to start formal exit negotiations. That’s increased tensions with other European leaders, who excluded Cameron from a meeting in Brussels on Wednesday and want the process to start soon.

“Consumer confidence has collapsed since the vote,” Stephen Harmston, head of YouGov Reports, said in a statement. “Four days of uncertainty has wiped out the gains made over the last three years. It has not yet reached the depths of the financial crisis in 2008 but we expect it to decline further as some of the consequences of Brexit kick in.”

GfK’s survey, conducted in the two weeks through June 15, suggests sentiment was already becoming gloomier before the outcome. Its headline consumer index remained at minus 1 this month, but the measure of how consumers view the 12-month economic outlook slipped to minus 14 from minus 13, down 18 points from a year earlier.

“One trend that continued in the run up to the referendum is a deepening pessimism over the general economic situation,” said Joe Staton at GfK. “In these extraordinary consumer circumstances, all bets are off until we all know more. We can expect plenty of volatility in consumer confidence at least until Brexit negotiations are under way.”

GfK questioned 2,000 people for its survey. YouGov’s index is based on 7,000 online interviews per month.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE