Sharp increase in optimism for the economy over the coming year – survey

Consumer optimism for the economy over the coming year has seen its sharpest increase since the summer of 2016, according to a long-running survey.

GfK’s Consumer Confidence Index rose three points to minus 11 in December amid a “clear sense of a change of consumer sentiment”.

Expectations for the general economic situation over the next 12 months increased a significant seven points to minus 27 – 11 points higher than this time last year.

The forecast for personal finances over the coming 12 months also rose, by two points to plus three – four points higher than last December.

Meanwhile, the major purchase index, an indicator of confidence in spending on big ticket items, was up by three points to plus three, a key figure during the remaining shopping days of the year.

Source: GfK
Source: GfK

The figures will give hope to retailers, who learned on Thursday that sales slowed to their weakest annual growth rate sine April 2018 in November as consumers exercised caution amid political uncertainty.

Joe Staton, client strategy director at GfK, said: “There’s a clear sense of a change in consumer sentiment this month.

“The picture for the year to come is much stronger, with a two-point improvement in how consumers view their personal financial prospects and a very healthy seven-point jump on how they see the wider economy next year.

“We haven’t seen such a robust increase in confidence about our economic future since the summer of 2016. Despite official warning signs about the flatlining of Britain’s economy, we know that record high employment and below target levels of inflation are helping to boost consumers’ expectations for the year ahead.”

Mr Staton added: “The overall index score has failed to break into positive territory for the past four years due to confusion and uncertainty about the future direction of the UK.

“A great many people will be gazing into their crystal balls right now; ours indicates a rebound in confidence in 2020 based on renewed optimism and energy for a post-Brexit Britain.”