UK consumer confidence collapses after general election delivers hung parliament and property market slows

'The hung parliament seems to have further dampened consumers' spirits, which were already sinking following the continued squeeze on household finances,' Stephen Harmston, head of YouGov, said

Ravender Sembhy
Monday 26 June 2017 13:39 BST
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Inflation hit its highest level for nearly four years in May at 2.9 per cent, tightening the squeeze on consumers already struggling due to low wage growth
Inflation hit its highest level for nearly four years in May at 2.9 per cent, tightening the squeeze on consumers already struggling due to low wage growth

Consumer confidence has collapsed following Theresa May's General Election catastrophe as household finances come under renewed pressure and fears grow over the housing market.

Data from YouGov and the Centre for Economics and Business Research (CEBR) shows a “pronounced collapse” in confidence following the election - falling from 109.1 in the week before the vote to 105.2 after.

The figures are at levels comparable to the aftermath of last year's vote to quit the EU, when consumer confidence plummeted from 111.9 in the weeks before the referendum to 104.3 in the days after it.

Stephen Harmston, head of YouGov, said: “Consumer confidence has been generally ticking downward since last autumn but the events of the past month have placed it under greater pressure.

“The hung parliament seems to have further dampened consumers' spirits, which were already sinking following the continued squeeze on household finances.

“But the real cause for alarm will be the cooling of the property market as this is one of the key things that has propped up consumer confidence over the past few years.”

Inflation hit its highest level for nearly four years in May at 2.9 per cent, tightening the squeeze on consumers already struggling due to low wage growth.

On Monday, a report by the British Bankers' Association showed consumer borrowing eased back last month as inflation's upward march forced shoppers to rein in their spending.

Mortgage approvals also fell 3.3 per cent in May as the housing market stutters.

For June as a whole, consumer confidence dropped to 106.9, its second-lowest level since the summer of 2013. The only time it was worse was just after last year's Brexit vote.

Although a score over 100 shows more consumers are confident than unconfident, the index has yet to get back to the levels it was at before last June's referendum.

Douglas McWilliams, deputy chairman at the CEBR, said: “It looks as though the indecisive result of the election has seriously affected economic prospects already dampened by Brexit uncertainty.

“The data shows a sharp drop in consumers' confidence about their own financial situation and even more so about house prices. This will affect spending in the high street, in shopping centres and online.”

Mr McWilliams added that business confidence is also likely to have dropped, with the country to be spared a recession by strong international trade.

In somewhat brighter news, YouGov and the CEBR said the data suggests the job security and business activity measures, both for the last 30 days and the next 12 months, are proving “relatively resilient”.

PA

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