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Consumer confidence strong, say Deloitte and PwC

Oct 31
Tags: Deloitte, PwC
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Consumer confidence strong, say Deloitte and PwC

Ongoing uncertainty around Britain's exit from the European Union and the impact it could have on the economy does not appear to have dented consumer confidence in the UK, according to recent research.

The latest Consumer Tracker from Deloitte suggested that consumers had "shrugged off post-referendum pessimism", with confidence experiencing the biggest quarterly increase for 18 months and hitting a five-year high.

Based on a survey of 3,000 people, conducted in September, the quarterly study revealed an increase in five of the six measures that make up the overall index. Optimism around job security, job opportunities and career progression was particularly strong.

Confidence in job security had dropped for the three preceding quarters but rose by six percentage points in the third quarter of this year.

However, Deloitte also revealed that its latest measure of consumer sentiment in London dropped by three percentage points, putting the figure nine per cent lower than a year earlier and behind the rest of the UK.

Concerns around Brexit are thought to have played a key part in this trend, with voters in the capital backing the country staying in the EU.

Summing up the findings, Ian Stewart, chief economist at Deloitte, said consumers appear to have "put Brexit fears to one side" and are benefiting from "favourable tailwinds" such as low inflation and relatively high disposable incomes.

He added: "In an inversion of the usual relationship London's consumers are less upbeat than the rest of the UK. The Brexit vote may be weighing on a region in which 60 per cent of the population voted to remain and where reliance on financial services, migration and capital flows are especially strong."

PricewaterhouseCoopers (PwC) came to similar conclusions about public confidence in a recent survey, discovering that consumers were feeling relatively positive about their disposable income over the next 12 months following a "Brexit blip" earlier in the year.

Around one in five survey respondents (19 per cent) across Britain said they expect to be somewhat better off next year than they were 12 months ago, up from 15 per cent in July.

The proportion predicting that they would be much better off rose marginally from five per cent to six per cent.

Analysing the findings, PwC director Kien Tan noted that the outlook among young people is particularly positive. Just over half (51 per cent) of 18 to 24-year-olds expected to become better off over the next 12 months.

These findings are likely to encourage businesses in the retail industry in the run-up to Christmas, even though the survey also found that consumers generally expect to spend the same amount or less than last year on their Christmas shopping.

Lisa Hooker, partner at PwC, said the firm is generally positive in its outlook for the festive trading season. However, she also noted that consumer activity can sometimes be dictated by weather conditions, with the past three years bringing higher-than-average temperatures in the last three months of the year.

"If 2016 reverts to the long-term average, a chillier than recent run-up to Christmas could be good news for many retailers, such as clothing and outdoor goods retailers, as well as destination shopping centres and department stores where consumers can do all their shopping under one roof," said Ms Hooker.

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Image: funstock via iStock

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