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Consumer confidence stumbles in the face of uncertainty
25 April 2016
- Deloitte Consumer Tracker shows a fall in UK consumer confidence for Q1 2016
- Health and wellbeing concerns key drivers of lower consumer confidence
- Gap in confidence between homeowners and non-homeowners at its widest ever
- Awareness of global and domestic economic headwinds leads to consumer caution
UK consumer confidence fell in the first three months of 2016, according to the latest Consumer Tracker from Deloitte, the business advisory firm. The quarterly survey of 3,000 UK consumers reveals a renewed caution in the consumer sector, after confidence fell by three percentage points year-on-year in Q1 2016, from -5 per cent to -8 per cent.
The fall in overall confidence was driven partly by an unusually large seasonal decline in sentiment about general health and wellbeing. This year the trend has been particularly pronounced, with the confidence reading for health and wellbeing falling by six points from Q1 2015, to its lowest level since the survey began in Q3 2011.
Ben Perkins, head of consumer business research, said: “The UK’s consumers are increasingly health-conscious. The flu season arriving later than usual and extensive media coverage around health in the first three months of the year seem to have focused consumers’ attention on health and wellbeing as an issue.
“In addition, the recent sugar tax debate, as well as the growing use of health and fitness wearables and apps may also be increasing consumers’ awareness of their own wellbeing.”
According to the survey, the confidence gap between homeowners and non-homeowners is now at its widest point since the Consumer Tracker began. Non-homeowners reported a four point fall in confidence from the previous quarter.
Furthermore, London-based consumers were significantly less optimistic than consumers in other regions, with overall confidence in the capital falling by ten points year-on-year. Londoners’ confidence towards job security fell by six points and disposable income by nine points, compared to the previous quarter.
Ian Stewart, chief economist at Deloitte, said: “For UK consumers, homeownership is synonymous with financial security. Those in ‘generation rent’ are starting to feel the impact of private rental prices having outstripped wage increases in recent years.
“London, with its particular exposure to developments in the global economy and financial markets, has seen a particularly marked drop in confidence.”
The Consumer Tracker also revealed that the gap between expansionary and defensive spending behaviour has flattened since the start of the year, indicating that consumers have become more measured in their spending. In the coming months, consumers expect to spend more on essentials, such as groceries, and less on utilities and big ticket items, possibly in anticipation of political and economic uncertainty in the short term.
Stewart added: “Despite what appears to be near-perfect economic fundamentals for UK consumers, with low unemployment, low cost of borrowing, low inflation and rising wages, confidence has taken a knock.
“Confidence in the general economic situation is now 18 points lower than at the same time last year. Greater risks in the global economy and domestic uncertainty in the run up to the EU referendum on 23rd June seem to have unsettled consumers.”
Notes to editors
About the research
The Deloitte Consumer Tracker is based on a consumer survey carried out by independent market research agency, YouGov, on our behalf. This survey was conducted online with a nationally representative sample of over 3,000 UK adults aged 18+ between 18 and 20 March 2016.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited.