NEWS11 August 2022

Consumer confidence rises despite looming economic crisis

News Trends UK

UK – Consumer confidence has risen for the first time since November 2021 following an increase in household finance measures, according to YouGov and the Centre for Economics and Business Research (Cebr).

Pound coins

Consumer confidence for July 2022 was up two points to 103, with a score of 100 or above seen as positive, albeit below the 113.2 registered in July 2021.

Fieldwork for this study took place before the Bank of England announced that inflation was expected to hit 13% in 2022.

YouGov and Cebr found that household finance measures for the past 30 days and next 12 months were up 5.3 and 3.1 points respectively, but remained negative at 63 and 51.8 points.

Both household finance measures were down considerably from July 2021, when household finance confidence for the past 30 days was at 94.6 and for the year ahead was at 101.8.

Business activity also saw an improvement, with scores for the past 30 days rising half a point from 110.5 to 111 and for the next 12 months rising from 118.3 to 121.8.

Perceptions of job security among UK workers were also boosted with a 0.5 point increase from 93.3 to 93.7, and the outlook for the year ahead rising from 119.6 to 120.9.

The only metric to see a decline in the index this month was for home valuations, which dropped 0.5 points from 133.1 to 132.6, although homeowners were more optimistic than the previous three months with a two-point jump up to 132.1 from 130.1.

Kay Neufeld, head of forecasting at Cebr, said: “The increases in these measures are from an extremely low base and the outlook remains challenging.

“While the first cost-of-living payments have started to arrive, questions remain regarding the type of support households can expect over the coming months, with the energy price cap set to rise to new record highs in October and January next year.

“Further headwinds will emerge as the UK economy is expected to teeter on the brink of recession in the second half of the year, suggesting the spike in consumer confidence may prove short-lived.”

Emma McInnes, global head of financial services at YouGov, said: “While this increase in consumer confidence is undoubtedly positive news, there is a long road back to regain ground lost over the past seven months of decline.

“With the energy price cap rising in a few months alongside the UK economy heading towards a recession, there is every chance that this spike could be offset by a further long-term decline in the overall index.”