NEWS2 February 2021

Slight increase to consumer confidence in January

Behavioural science Brexit Covid-19 News Trends UK

UK – Consumer confidence has risen in Britain despite the imposition of national restrictions against Covid-19 in January, according to analysis from YouGov and the Centre for Economics and Business Research (Cebr).

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Overall consumer confidence rose to a score of 102.9, an increase of 0.3 on the previous month and making January the third month of gains in a row. Any score above 100 means consumers are more confident than not.

The consumer confidence score is based on data collected by YouGov, including more than 6,000 interviews a month with questions on people’s views on their household finances, property prices, job security and business activity, both over the past 30 days and the next 12 months.

The research found that households believed they would be better off financially in the next 12 months, with a rise of 4.4 points, albeit still in negative confidence at 95.8. However, confidence in household finances over the past month fell from 90.9 to 90.5.

Home value expectations for the next 12 months rose by 1.6 to 113.1 points despite Brexit and the end of the stamp duty break later this year. The number of homeowners who believed their property increased in value in the previous month increased by 0.3 to 109.5.

Confidence in job security in the past month fell by 0.3 in January to 87.1, although many respondents were optimistic that situation will improve over the next year, with the outlook for job security rising by 1.5 to 110.6.

Coinciding with lockdown, respondents’ confidence in business activity at their workplace fell among respondents over the past month by 3.7 points, to 99.4 overall. Business activity for the year ahead looked brighter, with a score of 117.4, albeit one point lower than the previous month.

Additional research from YouGov and Cebr showed 76% of people believed the economy would continue to shrink a year from now, while 22% expect it to grow and 1% expect an economic boom.

Darren Yaxley, director of reputation research at YouGov, said: “Even with a winter full of restrictions and another lockdown, consumer confidence rose again, albeit modestly, in January making it the third month in a row to see an increase.

“However, it’s important to note that almost every metric is still lower than it was a year ago and with so many difficult decisions on the horizon, such as the end of furlough and a tough budget from the chancellor in March, and with so much resting on a successful vaccine roll out, there is still likely to be lots of uncertainty in the minds of consumers.”

Kay Neufeld, head of macroeconomics at the Cebr, said: “Consumers seem to be taking solace in the fact that the national vaccination effort is running smoothly so far with a shot of a return to normality in the second half of the year.

“Moreover, the surprisingly resilient housing market is fuelling hopes that prices will continue to rise in 2021, leading to increases in the forward looking home value and household finances indicators.”