Data points to slowdown in UK economy
Household spending has fallen at the fastest rate in almost four years, according to Visa’s consumer spending index, as higher prices have left consumers less willing to spend.
Spending fell by 0.3% between April and June compared to the same period a year earlier. Household goods were particularly hard-hit, dropping 3.4%, as consumers deferred non-essential purchases. Recreation and culture spending dropped 1.2%, while clothing and footwear spending fell 0.5%.
At the same time business confidence is slowing. A Deloitte survey of UK chief financial officers (CFOs) showed 72% expect negative long-term effects on the business environment as a result of Brexit, up from 60% in the first quarter.
The survey found that CFOs believe uncertainty has risen, reflecting both the General Election result and increasing concerns about growth.
A survey of small businesses, reported by the Mail on Sunday, also showed declining confidence. The SME Confidence Tracker, a quarterly survey of 1,000 small and medium enterprises from funding provider Bibby Financial Services, found 59% of respondents thought that Brexit uncertainty damaged the prospects for a more productive and prosperous economy.
Ian Stewart, chief economist at Deloitte, said: “Business sentiment has been on a roller coaster ride in the last 18 months, slumping on the surprise referendum result before staging a strong recovery and then falling back in the wake of the General Election. Many factors have been at work, but Brexit has been a consistent concern. Such concerns eased in the run up to the General Election in the wake of the government’s announcement of its broad negotiating aims for Brexit.
“Although CFO confidence has taken a knock since the election, sentiment and risk appetite are well above the levels seen last summer. Favourable financial conditions and an improving global backdrop seem to be partially offsetting the effects of domestic uncertainties for UK CFOs.”