Consumer confidence falls as expectations of UK economy worsen

Consumer confidence has fallen towards levels seen in the aftermath of the Brexit vote as expectations of UK economic growth worsened, according to research.

The long-running GfK Consumer Confidence Index dropped one point to minus 10 in October, tracking near a level of minus 12 recorded the month after Britain voted to leave the European Union.

The move was driven by slip in the economic indexes, with the measure for the general economic situation over the last year falling one point to minus 29 - meaning it was 10 points lower than October last year.

Economic expectations for the next 12 months also slipped two points to minus 26, making it nine points lower than the same month in 2016, the report showed.

However, the two measures linked to spending picked up in October, as consumers showed their resilience in the face of rising inflation, sluggish wage growth and a potential Bank of England interest rate hike on Thursday.

Joe Staton, Gfk head of market dynamics, said: "It's no surprise that the overall index score continues to bump along in negative territory this month.

"As concerns about the wider economic prospects for the UK economy dampen our outlook, consumers are showing no real 'get-up-and-go'."

The personal finance index for the last year picked up by one point to zero in October, while the major purchase measure climbed two points to plus three.

Mr Staton added: "The tiny shift up a point in how we view our personal finances over the past year is counter-intuitive given rising living costs, an imminent interest rate rise, and the reality that we earn less in real terms in 2017 than in early 2006.

"Our enthusiasm for spending, as witnessed by the uptick in the major purchase index, is more worrying than reassuring.

"Surging credit card use is fuelling spending at the expense of our appetite for saving, which is growing at the slowest rate since the start of the 2008/2009 financial crisis.

"We are now entering the crucial Christmas trading season and it will be a testing time for retailers and consumers alike. Will consumers carry on shopping or start to cut back in the face of mounting pressure on our pockets?"

GfK said the savings index was at plus three in October, in line with September's reading, but nine points below October last year.

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